U.S. Markets closed

Is Capstead Mortgage Corporation (NYSE:CMO) Excessively Paying Its CEO?

Rowena Gregory

Phil Reinsch has been the CEO of Capstead Mortgage Corporation (NYSE:CMO) since 2016. First, this article will compare CEO compensation with compensation at similar sized companies. After that, we will consider the growth in the business. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. The aim of all this is to consider the appropriateness of CEO pay levels.

Check out our latest analysis for Capstead Mortgage

How Does Phil Reinsch’s Compensation Compare With Similar Sized Companies?

At the time of writing our data says that Capstead Mortgage Corporation has a market cap of US$615m, and is paying total annual CEO compensation of US$2.0m. (This figure is for the year to 2017). While this analysis focuses on total compensation, it’s worth noting the salary is lower, valued at US$600k. As part of our analysis we looked at companies in the same jurisdiction, with market capitalizations of US$400m to US$1.6b. The median total CEO compensation was US$2.3m.

That means Phil Reinsch receives fairly typical remuneration for the CEO of a company that size. This doesn’t tell us a whole lot on its own, but looking at the performance of the actual business will give us useful context.

You can see, below, how CEO compensation at Capstead Mortgage has changed over time.

NYSE:CMO CEO Compensation January 4th 19

Is Capstead Mortgage Corporation Growing?

On average over the last three years, Capstead Mortgage Corporation has shrunk earnings per share by 24% each year. Its revenue is down -15% over last year.

Unfortunately, earnings per share have trended lower over the last three years. 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.

Shareholders might be interested in this free visualization of analyst forecasts. .

Has Capstead Mortgage Corporation Been A Good Investment?

Given the total loss of 2.1% over three years, many shareholders in Capstead Mortgage Corporation are probably rather dissatisfied, to say the least. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary…

Phil Reinsch is paid around what is normal the leaders of comparable size companies.

After looking at EPS and total shareholder returns, it’s certainly hard to argue the company has performed well, since both metrics are down. Few would argue that it’s wise for the company to pay any more, before returns improve. Shareholders may want to check for free if Capstead Mortgage insiders are buying or selling shares.

Or you might prefer examine intently this intuitive graph showing past earnings and revenue.

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.