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Is Capstead Mortgage Corporation's (NYSE:CMO) CEO Being Overpaid?

Simply Wall St

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

Check out our latest analysis for Capstead Mortgage

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

Our data indicates that Capstead Mortgage Corporation is worth US$721m, and total annual CEO compensation is US$2.6m. (This figure is for the year to December 2018). While we always look at total compensation first, we note that the salary component is less, at US$625k. When we examined a selection of companies with market caps ranging from US$400m to US$1.6b, we found the median CEO total compensation was US$2.7m.

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 a visual representation of the CEO compensation at Capstead Mortgage, below.

NYSE:CMO CEO Compensation, July 5th 2019

Is Capstead Mortgage Corporation Growing?

On average over the last three years, Capstead Mortgage Corporation has shrunk earnings per share by 36% each year (measured with a line of best fit). Its revenue is down -57% over last year.

Few shareholders would be pleased to read that earnings per share are lower over three years. This is compounded by the fact revenue is actually down on last year. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. It could be important to check this free visual depiction of what analysts expect for the future.

Has Capstead Mortgage Corporation Been A Good Investment?

Capstead Mortgage Corporation has generated a total shareholder return of 7.3% over three years, so most shareholders wouldn't be too disappointed. But they would probably prefer not to see CEO compensation far in excess of the median.

In Summary...

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

The company isn't growing earnings per share, and nor have the total returns inspired us. We do not think the CEO pay is a problem, but we'd venture the company should look to improve its business metrics (and share price) before paying any more. 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.

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.

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. Thank you for reading.