Our View On Pebblebrook Hotel Trust's (NYSE:PEB) CEO Pay

By
Simply Wall St
Published
August 11, 2020

Jon Bortz became the CEO of Pebblebrook Hotel Trust (NYSE:PEB) in 2009, 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 look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Pebblebrook Hotel Trust.

See our latest analysis for Pebblebrook Hotel Trust

How Does Total Compensation For Jon Bortz Compare With Other Companies In The Industry?

Our data indicates that Pebblebrook Hotel Trust has a market capitalization of US$1.5b, and total annual CEO compensation was reported as US$5.4m for the year to December 2019. We note that's a small decrease of 4.1% on last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$750k.

On examining similar-sized companies in the industry with market capitalizations between US$1.0b and US$3.2b, we discovered that the median CEO total compensation of that group was US$4.6m. From this we gather that Jon Bortz is paid around the median for CEOs in the industry. Furthermore, Jon Bortz directly owns US$14m worth of shares in the company, implying that they are deeply invested in the company's success.

Component20192018Proportion (2019)
Salary US$750k US$750k 14%
Other US$4.7m US$4.9m 86%
Total CompensationUS$5.4m US$5.6m100%

On an industry level, around 15% of total compensation represents salary and 85% is other remuneration. There isn't a significant difference between Pebblebrook Hotel Trust 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.

NYSE:PEB CEO Compensation August 11th 2020

Pebblebrook Hotel Trust's Growth

Over the last three years, Pebblebrook Hotel Trust has shrunk its earnings per share by 54% per year. Its revenue is down 13% over the previous year.

Few shareholders would be pleased to read that earnings have declined. This is compounded by the fact revenue is actually down on last year. These factors suggest that the business performance wouldn't really justify a high pay packet 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 Pebblebrook Hotel Trust Been A Good Investment?

Since shareholders would have lost about 57% over three years, some Pebblebrook Hotel Trust investors would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

As we touched on above, Pebblebrook Hotel Trust is currently paying a compensation that's close to the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. In the meantime, the company has reported declining earnings growth and shareholder returns over the last three years. Considering overall performance, shareholders will likely hold off support for a raise until results improve.

CEO pay is simply one of the many factors that need to be considered while examining business performance. We identified 2 warning signs for Pebblebrook Hotel Trust (1 is a bit concerning!) that you should be aware of before investing here.

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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