Dan Hansen became the CEO of Summit Hotel Properties, Inc. (NYSE:INN) in 2010, 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 Summit Hotel Properties pays its CEO appropriately, considering recent earnings growth and total shareholder returns.
Note: The company does not report funds from operations, and as a result, we have used earnings per share in our analysis.
How Does Total Compensation For Dan Hansen Compare With Other Companies In The Industry?
According to our data, Summit Hotel Properties, Inc. has a market capitalization of US$654m, and paid its CEO total annual compensation worth US$5.0m over the year to December 2019. We note that's an increase of 14% above last year. While we always look at total compensation first, our analysis shows that the salary component is less, at US$700k.
For comparison, other companies in the same industry with market capitalizations ranging between US$400m and US$1.6b had a median total CEO compensation of US$4.0m. This suggests that Summit Hotel Properties remunerates its CEO largely in line with the industry average. What's more, Dan Hansen holds US$7.9m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.
On an industry level, around 15% of total compensation represents salary and 85% is other remuneration. There isn't a significant difference between Summit Hotel Properties and the broader market, in terms of salary allocation in the overall compensation package. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.
Summit Hotel Properties, Inc.'s Growth
Over the last three years, Summit Hotel Properties, Inc. has shrunk its earnings per share by 35% per year. Its revenue is down 28% over the previous year.
Few shareholders would be pleased to read that EPS have declined. This is compounded by the fact revenue is actually down on last year. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.
Has Summit Hotel Properties, Inc. Been A Good Investment?
Since shareholders would have lost about 52% over three years, some Summit Hotel Properties, Inc. investors would surely be feeling negative emotions. Therefore, it might be upsetting for shareholders if the CEO were paid generously.
As previously discussed, Dan is compensated close to the median for companies of its size, and which belong to the same industry. Meanwhile, EPS growth and shareholder returns have been in the red for the last three years. We'd stop short of saying compensation is inappropriate, but we would understand if shareholders had questions regarding a future raise.
We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. We did our research and identified 2 warning signs (and 1 which shouldn't be ignored) in Summit Hotel Properties 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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