Scott Peters became the CEO of Healthcare Trust of America, Inc. (NYSE:HTA) in 2006, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. This analysis will also assess whether Healthcare Trust of America pays its CEO appropriately, considering its funds from operations growth and total shareholder returns.
Comparing Healthcare Trust of America, Inc.'s CEO Compensation With the industry
At the time of writing, our data shows that Healthcare Trust of America, Inc. has a market capitalization of US$5.7b, and reported total annual CEO compensation of US$6.4m for the year to December 2019. We note that's a small decrease of 6.2% on last year. While we always look at total compensation first, our analysis shows that the salary component is less, at US$900k.
In comparison with other companies in the industry with market capitalizations ranging from US$4.0b to US$12b, the reported median CEO total compensation was US$6.2m. So it looks like Healthcare Trust of America compensates Scott Peters in line with the median for the industry. Moreover, Scott Peters also holds US$7.8m worth of Healthcare Trust of America stock directly under their own name, which reveals to us that they have a significant personal stake in the company.
Talking in terms of the industry, salary represented approximately 15% of total compensation out of all the companies we analyzed, while other remuneration made up 85% of the pie. Although there is a difference in how total compensation is set, Healthcare Trust of America more or less reflects the market in terms of setting the salary. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.
A Look at Healthcare Trust of America, Inc.'s Growth Numbers
Over the past three years, Healthcare Trust of America, Inc. has seen its funds from operations (FFO) grow by 13% per year. In the last year, its revenue is up 4.0%.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's good to see a bit of revenue growth, as this suggests the business is able to grow sustainably. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.
Has Healthcare Trust of America, Inc. Been A Good Investment?
With a three year total loss of 1.5% for the shareholders, Healthcare Trust of America, Inc. would certainly have some dissatisfied shareholders. So shareholders would probably want the company to be lessto generous with CEO compensation.
As we touched on above, Healthcare Trust of America, Inc. is currently paying a compensation that's close to the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. Meanwhile, shareholder returns paint a sorry picture for the company, finishing in the red over the last three years. But on the bright side, FFO growth is positive over the same period. Considering positive FFO growth, we'd say compensation is fair, but shareholders may be wary of a bump in pay before the company logs positive returns.
CEO pay is simply one of the many factors that need to be considered while examining business performance. We did our research and identified 5 warning signs (and 1 which can't be ignored) in Healthcare Trust of America we think you should know about.
Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies that have HIGH return on equity and low debt.
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This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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