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In 2006 Jay Shah was appointed CEO of Hersha Hospitality Trust (NYSE:HT). This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. Then we'll look at a snap shot of the business growth. 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.
How Does Jay Shah's Compensation Compare With Similar Sized Companies?
At the time of writing our data says that Hersha Hospitality Trust has a market cap of US$735m, and is paying total annual CEO compensation of US$4.7m. (This figure is for the year to December 2018). That's less than last year. While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at US$770k. 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$2.7m.
As you can see, Jay Shah is paid more than the median CEO pay at companies of a similar size, in the same market. However, this does not necessarily mean Hersha Hospitality Trust is paying too much. A closer look at the performance of the underlying business will give us a better idea about whether the pay is particularly generous.
You can see, below, how CEO compensation at Hersha Hospitality Trust has changed over time.
Is Hersha Hospitality Trust Growing?
Over the last three years Hersha Hospitality Trust has shrunk its earnings per share by an average of 63% per year (measured with a line of best fit). Its revenue is up 4.2% over last year.
Few shareholders would be pleased to read that earnings per share are lower over three years. The modest increase in revenue in the last year isn't enough to make me overlook the disappointing change in earnings per share. 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 Hersha Hospitality Trust Been A Good Investment?
With a total shareholder return of 11% over three years, Hersha Hospitality Trust shareholders would, in general, be reasonably content. But they probably wouldn't be so happy as to think the CEO should be paid more than is normal, for companies around this size.
We examined the amount Hersha Hospitality Trust pays its CEO, and compared it to the amount paid by similar sized companies. Our data suggests that it pays above the median CEO pay within that group.
Earnings per share have not grown in three years, and the revenue growth fails to impress us.
And while shareholder returns have been respectable, they have hardly been superb. So we think more research is needed, but we don't think the CEO underpaid. Shareholders may want to check for free if Hersha Hospitality Trust insiders are buying or selling shares.
Important note: Hersha Hospitality Trust may not be the best stock to buy. You might find something better in this list of interesting companies with high ROE 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 email@example.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.