Stock Analysis

We Think The Compensation For Lexington Realty Trust's (NYSE:LXP) CEO Looks About Right

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The share price of Lexington Realty Trust (NYSE:LXP) has increased significantly over the past few years. However, the earnings growth has not kept up with the share price momentum, suggesting that some other factors may be driving the price direction. Some of these issues will occupy shareholders' minds as the AGM rolls around on 18 May 2021. It would also be an opportunity for them to influence management through exercising their voting power on company resolutions, including CEO and executive remuneration, which could impact on firm performance in the future. From the data that we gathered, we think that shareholders should hold off on a raise on CEO compensation until performance starts to show some improvement.

See our latest analysis for Lexington Realty Trust

Comparing Lexington Realty Trust's CEO Compensation With the industry

According to our data, Lexington Realty Trust has a market capitalization of US$3.5b, and paid its CEO total annual compensation worth US$5.7m over the year to December 2020. That is, the compensation was roughly the same as last year. While we always look at total compensation first, our analysis shows that the salary component is less, at US$765k.

For comparison, other companies in the same industry with market capitalizations ranging between US$2.0b and US$6.4b had a median total CEO compensation of US$5.3m. This suggests that Lexington Realty Trust remunerates its CEO largely in line with the industry average. Furthermore, Will Eglin directly owns US$33m worth of shares in the company, implying that they are deeply invested in the company's success.

Component20202019Proportion (2020)
Salary US$765k US$750k 13%
Other US$4.9m US$5.0m 87%
Total CompensationUS$5.7m US$5.7m100%

Speaking on an industry level, nearly 15% of total compensation represents salary, while the remainder of 85% is other remuneration. In Lexington Realty Trust's case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

NYSE:LXP CEO Compensation May 12th 2021

Lexington Realty Trust's Growth

Over the last three years, Lexington Realty Trust has not seen its funds from operations (FFO) change much, though they have deteriorated slightly. In the last year, its revenue is up 5.1%.

The lack of FFO growth is certainly uninspiring. And the modest revenue growth over 12 months isn't much comfort against the reduced FFO. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. 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 Lexington Realty Trust Been A Good Investment?

Most shareholders would probably be pleased with Lexington Realty Trust for providing a total return of 76% over three years. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.

In Summary...

Although shareholders would be quite happy with the returns they have earned on their initial investment, earnings have failed to grow and this could mean returns may be hard to keep up. Shareholders should make the most of the coming opportunity to question the board on key concerns they may have and revisit their investment thesis with regards to the company.

CEO pay is simply one of the many factors that need to be considered while examining business performance. That's why we did our research, and identified 5 warning signs for Lexington Realty Trust (of which 2 are a bit concerning!) that you should know about in order to have a holistic understanding of the stock.

Important note: Lexington Realty Trust is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.

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LXP Industrial Trust

Lexington Realty Trust (NYSE: LXP) is a publicly traded real estate investment trust (REIT) that owns a portfolio of real estate assets consisting primarily of equity investments in single-tenant net-leased industrial properties across the United States.

Undervalued with proven track record and pays a dividend.