Jon Bortz has been the CEO of Pebblebrook Hotel Trust (NYSE:PEB) since 2009, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also assess whether Pebblebrook Hotel Trust pays its CEO appropriately, considering recent earnings growth and total shareholder returns.
Comparing Pebblebrook Hotel Trust's CEO Compensation With 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. That's a slightly lower by 4.1% over the previous year. While we always look at total compensation first, our analysis shows that the salary component is less, 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. This suggests that Pebblebrook Hotel Trust remunerates its CEO largely in line with the industry average. Moreover, Jon Bortz also holds US$14m worth of Pebblebrook Hotel Trust stock directly under their own name, which reveals to us that they have a significant personal stake in the company.
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. 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.
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.
Overall this is not a very positive result for shareholders. This is compounded by the fact revenue is actually down on last year. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..
Has Pebblebrook Hotel Trust Been A Good Investment?
With a three year total loss of 57% for the shareholders, Pebblebrook Hotel Trust would certainly have some dissatisfied shareholders. So shareholders would probably want the company to be lessto generous with CEO compensation.
As we noted earlier, Pebblebrook Hotel Trust pays its CEO in line with similar-sized companies belonging to the same industry. In the meantime, the company has reported declining earnings growth and shareholder returns over the last three years. We'd stop short of saying compensation is inappropriate, but we would understand if shareholders had questions regarding a future raise.
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 2 warning signs for Pebblebrook Hotel Trust (of which 1 makes us a bit uncomfortable!) that you should know about in order to have a holistic understanding of the stock.
Important note: Pebblebrook Hotel 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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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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