Why We Think One Liberty Properties, Inc.'s (NYSE:OLP) CEO Compensation Is Not Excessive At All

By
Simply Wall St
Published
June 03, 2021
NYSE:OLP
Source: Shutterstock

Despite positive share price growth of 30% for One Liberty Properties, Inc. (NYSE:OLP) over the last few years, earnings growth has been disappointing, which suggests something is amiss. The upcoming AGM on 10 June 2021 may be an opportunity for shareholders to bring up any concerns they may have for the board’s attention. 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. In our analysis below, we show why shareholders may consider holding off a raise for the CEO's compensation until company performance improves.

See our latest analysis for One Liberty Properties

Comparing One Liberty Properties, Inc.'s CEO Compensation With the industry

Our data indicates that One Liberty Properties, Inc. has a market capitalization of US$548m, and total annual CEO compensation was reported as US$1.8m for 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$865k.

In comparison with other companies in the industry with market capitalizations ranging from US$200m to US$800m, the reported median CEO total compensation was US$2.0m. This suggests that One Liberty Properties remunerates its CEO largely in line with the industry average. Moreover, Patrick Callan also holds US$7.2m worth of One Liberty Properties stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component20202019Proportion (2020)
Salary US$865k US$837k 47%
Other US$966k US$976k 53%
Total CompensationUS$1.8m US$1.8m100%

Speaking on an industry level, nearly 15% of total compensation represents salary, while the remainder of 85% is other remuneration. One Liberty Properties is paying a higher share of its remuneration through a salary in comparison to the overall industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

ceo-compensation
NYSE:OLP CEO Compensation June 3rd 2021

One Liberty Properties, Inc.'s Growth

One Liberty Properties, Inc. has reduced its funds from operations (FFO) by 3.4% per year over the last three years. Its revenue is down 3.3% over the previous year.

Overall this is not a very positive result for shareholders. And the fact that revenue is down year on year arguably paints an ugly picture. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. 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 One Liberty Properties, Inc. Been A Good Investment?

One Liberty Properties, Inc. has generated a total shareholder return of 30% over three years, so most shareholders would be reasonably content. But they would probably prefer not to see CEO compensation far in excess of the median.

To Conclude...

While it's true that shareholders have owned decent returns, it's hard to overlook the lack of earnings growth and this makes us question whether these returns will continue. 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 compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. In our study, we found 5 warning signs for One Liberty Properties you should be aware of, and 2 of them are concerning.

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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