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Is Capstead Mortgage Corporation's (NYSE:CMO) CEO Paid At A Competitive Rate?

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Phil Reinsch has been the CEO of Capstead Mortgage Corporation (NYSE:CMO) since 2016. 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. This process should give us an idea about how appropriately the CEO is paid.

View our latest analysis for Capstead Mortgage

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

According to our data, Capstead Mortgage Corporation has a market capitalization of US$779m, and paid its CEO total annual compensation worth US$2.6m over the year to December 2018. We think total compensation is more important but we note that the CEO salary is lower, at US$625k. We further remind readers that the CEO may face performance requirements to receive the non-salary part of the total compensation. 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$2.6m.

So Phil Reinsch is paid around the average of the companies we looked at. While this data point isn't particularly informative alone, it gains more meaning when considered with business performance.

The graphic below shows how CEO compensation at Capstead Mortgage has changed from year to year.

NYSE:CMO CEO Compensation, January 31st 2020
NYSE:CMO CEO Compensation, January 31st 2020

Is Capstead Mortgage Corporation Growing?

On average over the last three years, Capstead Mortgage Corporation has shrunk earnings per share by 90% each year (measured with a line of best fit). It achieved revenue growth of 11% over the last year.

Unfortunately, earnings per share have trended lower over the last three years. And while it's good to see some good revenue growth recently, the growth isn't really fast enough for me to put aside my concerns around earnings. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Shareholders might be interested in this free visualization of analyst forecasts.

Has Capstead Mortgage Corporation Been A Good Investment?

Since shareholders would have lost about 4.5% over three years, some Capstead Mortgage Corporation shareholders would surely be feeling negative emotions. So shareholders would probably think the company shouldn't be too generous with CEO compensation.

In Summary...

Phil Reinsch is paid around the same as most CEOs of similar 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. Most would consider it prudent for the company to hold off any CEO pay rise until performance improves. Whatever your view on compensation, you might want to check if insiders are buying or selling Capstead Mortgage shares (free trial).

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.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.