Should You Worry About Washington Real Estate Investment Trust’s (NYSE:WRE) CEO Pay Check?

Paul McDermott became the CEO of Washington Real Estate Investment Trust (NYSE:WRE) in 2013. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. After that, we will consider the growth in the business. And finally – as a second measure of performance – we will look at the returns shareholders have received over the last few years. The aim of all this is to consider the appropriateness of CEO pay levels.

See our latest analysis for Washington Real Estate Investment Trust

How Does Paul McDermott’s Compensation Compare With Similar Sized Companies?

Our data indicates that Washington Real Estate Investment Trust is worth US$2.3b, and total annual CEO compensation is US$7m. That’s a notable increase of 149% on last year. We examined companies with market caps from US$1.0b to US$3.2b, and discovered that the median CEO compensation of that group was US$4m.

As you can see, Paul McDermott is paid more than the median CEO pay at companies of a similar size, in the same market. However, this does not necessarily mean Washington Real Estate Investment Trust is paying too much. We can better assess whether the pay is overly generous by looking into the underlying business performance.

You can see a visual representation of the CEO compensation at Washington Real Estate Investment Trust, below.

NYSE:WRE CEO Compensation November 12th 18
NYSE:WRE CEO Compensation November 12th 18

Is Washington Real Estate Investment Trust Growing?

Washington Real Estate Investment Trust has reduced its earnings per share by an average of 40% a year, over the last three years. Its revenue is up 4.5% over last year.

Few shareholders would be pleased to read that earnings per share are lower over three years. The fairly low revenue growth fails to impress given that the earnings per share is down. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. So this free visual report on analyst forecasts could hold they key to an excellent investment decision.

Has Washington Real Estate Investment Trust Been A Good Investment?

Washington Real Estate Investment Trust has generated a total shareholder return of 21% over three years, so most shareholders would be reasonably content. But they probably don’t want to see the CEO paid more than is normal for companies around the same size.

In Summary…

We compared the total CEO remuneration paid by Washington Real Estate Investment Trust, and compared it to remuneration at a group of similar sized companies. We found that it pays well over the median amount paid in the benchmark group.

Neither earnings per share nor revenue have been growing sufficiently fast to impress us, over the last three years.

While shareholder returns are acceptable, they don’t delight. We also note that the CEO compensation is well up on last year. So you may want to delve deeper, because we don’t think the CEO pay is too low. High CEO remuneration is not great, but it certainly doesn’t mean a stock will perform poorly. Nonetheless, it might be wise to check if insiders have been selling.

But note: Washington Real Estate Investment Trust may not be the best stock to buy. So take a peek at this free list of interesting companies with high ROE and low debt.

To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.