Shareholders Will Probably Hold Off On Increasing Omega Healthcare Investors, Inc.'s (NYSE:OHI) CEO Compensation For The Time Being

By
Simply Wall St
Published
May 27, 2021
NYSE:OHI
Source: Shutterstock

Performance at Omega Healthcare Investors, Inc. (NYSE:OHI) has been reasonably good and CEO C. Pickett has done a decent job of steering the company in the right direction. In light of this performance, CEO compensation will probably not be the main focus for shareholders as they go into the AGM on 03 June 2021. However, some shareholders will still be cautious of paying the CEO excessively.

See our latest analysis for Omega Healthcare Investors

How Does Total Compensation For C. Pickett Compare With Other Companies In The Industry?

At the time of writing, our data shows that Omega Healthcare Investors, Inc. has a market capitalization of US$8.9b, and reported total annual CEO compensation of US$10m for the year to December 2020. We note that's an increase of 43% above last year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$824k.

For comparison, other companies in the same industry with market capitalizations ranging between US$4.0b and US$12b had a median total CEO compensation of US$6.0m. Hence, we can conclude that C. Pickett is remunerated higher than the industry median. Moreover, C. Pickett also holds US$168k worth of Omega Healthcare Investors stock directly under their own name.

Component20202019Proportion (2020)
Salary US$824k US$800k 8%
Other US$9.6m US$6.5m 92%
Total CompensationUS$10m US$7.3m100%

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. Omega Healthcare Investors sets aside a smaller share of compensation for salary, in comparison to the overall industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

ceo-compensation
NYSE:OHI CEO Compensation May 27th 2021

Omega Healthcare Investors, Inc.'s Growth

Omega Healthcare Investors, Inc. has seen its funds from operations (FFO) increase by 9.9% per year over the past three years. In the last year, its revenue is down 4.7%.

We would prefer it if there was revenue growth, but it is good to see a modest FFO growth at least. In conclusion we can't form a strong opinion about business performance yet; but it's one worth watching. 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 Omega Healthcare Investors, Inc. Been A Good Investment?

Most shareholders would probably be pleased with Omega Healthcare Investors, Inc. for providing a total return of 51% 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.

In Summary...

Seeing that the company has put up a decent performance, only a few shareholders, if any at all, might have questions about the CEO pay in the upcoming AGM. However, any decision to raise CEO pay might be met with some objections from the shareholders given that the CEO is already paid higher than the industry average.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. We did our research and identified 5 warning signs (and 1 which makes us a bit uncomfortable) in Omega Healthcare Investors 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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