Increases to Spirit Realty Capital, Inc.'s (NYSE:SRC) CEO Compensation Might Cool off for now

The share price of Spirit Realty Capital, Inc. (NYSE:SRC) 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. These concerns will be at the front of shareholders' minds as they go into the AGM coming up on 19 May 2021. They will be able to influence managerial decisions through the exercise of their voting power on resolutions, such as CEO remuneration and other matters, which may influence future company prospects. 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 Spirit Realty Capital

How Does Total Compensation For Jackson Hsieh Compare With Other Companies In The Industry?

According to our data, Spirit Realty Capital, Inc. has a market capitalization of US$5.1b, and paid its CEO total annual compensation worth US$8.2m over the year to December 2020. That's a notable decrease of 15% on last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$879k.

In comparison with other companies in the industry with market capitalizations ranging from US$4.0b to US$12b, the reported median CEO total compensation was US$6.2m. This suggests that Jackson Hsieh is paid more than the median for the industry. What's more, Jackson Hsieh holds US$17m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component	2020	2019	Proportion (2020)
Salary	US$879k	US$900k	11%
Other	US$7.4m	US$8.8m	89%
Total Compensation	US$8.2m	US$9.7m	100%

On an industry level, roughly 15% of total compensation represents salary and 85% is other remuneration. In Spirit Realty Capital's case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

Spirit Realty Capital, Inc.'s Growth

Spirit Realty Capital, Inc. has reduced its funds from operations (FFO) by 11% per year over the last three years. In the last year, its revenue is down 5.8%.

The decline in FFO is a bit concerning. And the impression is worse when you consider revenue is down year-on-year. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. 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 Spirit Realty Capital, Inc. Been A Good Investment?

Most shareholders would probably be pleased with Spirit Realty Capital, Inc. for providing a total return of 47% 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.

To Conclude...

While the return to shareholders does look promising, it's hard to ignore the lack of earnings growth and this makes us question whether these strong returns will continue. In the upcoming AGM, shareholders will get the opportunity to discuss any concerns with the board, including those related to CEO remuneration and assess if the board's plan will likely improve performance in the future.

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 6 warning signs for Spirit Realty Capital you should be aware of, and 1 of them is potentially serious.

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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