Drew Alexander took the reins as CEO of Weingarten Realty Investors’s (NYSE:WRI) and grew market cap to US$3.59B recently. Understanding how CEOs are incentivised to run and grow their company is an important aspect of investing in a stock. This is because, if incentives are aligned, more value is created for shareholders which directly impacts your returns as an investor. Today we will assess Alexander’s pay and compare this to the company’s performance over the same period, as well as measure it against other US CEOs leading companies of similar size and profitability. See our latest analysis for Weingarten Realty Investors
What has WRI’s performance been like?
Profitability of a company is a strong indication of WRI’s ability to generate returns on shareholders’ funds through corporate activities. In this exercise, I will use profits as a proxy for Alexander’s performance. Recently, WRI produced an earnings of US$451.27M , which is an increase of 177.39% from its previous year’s earnings of US$162.69M. This is an encouraging signal that WRI aims to sustain a strong track record of generating profits regardless of the challenges. Given earnings are moving the right way, CEO pay should echo Alexander’s value creation for shareholders. Over the same period Alexander’s total remuneration rose by 5.04% to US$5.23M. Furthermore, Alexander’s pay is also made up of 48.97% non-cash elements, which means that variabilities in WRI’s share price can impact the actual level of what the CEO actually collects at the end of the year.
Is WRI overpaying the CEO?
Even though one size does not fit all, as compensation should be tailored to the specific company and market, we can fashion a high-level thresold to see if WRI is an outlier. This outcome can help direct shareholders to ask the right question about Alexander’s incentive alignment. On average, a US mid-cap is worth around $5B, generates earnings of $290M and pays its CEO at roughly $5.3M per year. Allowing for the size of WRI in terms of market cap, as well as its performance, using earnings as a proxy, it appears that Alexander is paid in-line with other US CEOs of mid-caps, on average. This could mean Alexander is paid a suitable level.
You can breathe easy knowing that shareholder funds aren’t being used to overpay WRI’s CEO. However, on the flipside, you should ask whether Alexander is appropriately remunerated on the basis of retention. Its important for shareholders to be active in voting governance decisions, as board members are only representatives of investors’ voices. If you have not done so already, I highly recommend you to complete your research by taking a look at the following:
- Governance: To find out more about WRI’s governance, look through our infographic report of the company’s board and management.
- Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of WRI? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
To help readers see pass 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.