Scott Schaeffer has been the CEO of Independence Realty Trust, Inc. (NYSE:IRT) since 2013, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also look to assess whether the CEO is appropriately paid, considering recent funds from operations growth and investor returns for Independence Realty Trust.
Comparing Independence Realty Trust, Inc.'s CEO Compensation With the industry
At the time of writing, our data shows that Independence Realty Trust, Inc. has a market capitalization of US$1.1b, and reported total annual CEO compensation of US$3.9m for the year to December 2019. That's a notable increase of 8.9% on last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$700k.
In comparison with other companies in the industry with market capitalizations ranging from US$400m to US$1.6b, the reported median CEO total compensation was US$3.5m. From this we gather that Scott Schaeffer is paid around the median for CEOs in the industry. Furthermore, Scott Schaeffer directly owns US$4.7m worth of shares in the company, implying that they are deeply invested in the company's success.
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. Independence Realty Trust is paying a higher share of its remuneration through a salary in comparison to the overall industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.
Independence Realty Trust, Inc.'s Growth
Independence Realty Trust, Inc.'s funds from operations stayed pretty flat over the last one year. In the last year, its revenue is up 3.6%.
Its a bit disappointing to see that the company has failed to grow its FFO. The modest increase in revenue in the last year isn't enough to make us overlook the disappointing change in FFO. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..
Has Independence Realty Trust, Inc. Been A Good Investment?
Most shareholders would probably be pleased with Independence Realty Trust, Inc. for providing a total return of 50% over three years. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.
As we noted earlier, Independence Realty Trust pays its CEO in line with similar-sized companies belonging to the same industry. This doesn't look good when you see that FFO growth over the last three years has been negative. On the flip side, shareholder returns have been strong over the same time, which is certainly a positive sign. We do not think CEO compensation is a problem, but shrinking FFO is undoubtedly an issue that will have to be addressed.
CEO pay is simply one of the many factors that need to be considered while examining business performance. We identified 4 warning signs for Independence Realty Trust (1 is significant!) that you should be aware of before investing here.
Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.
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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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