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In 2012 Stuart Rothstein was appointed CEO of Apollo Commercial Real Estate Finance, Inc. (NYSE:ARI). This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. After that, we will consider the growth in the business. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. This process should give us an idea about how appropriately the CEO is paid.
How Does Stuart Rothstein's Compensation Compare With Similar Sized Companies?
At the time of writing, our data says that Apollo Commercial Real Estate Finance, Inc. has a market cap of US$2.8b, and reported total annual CEO compensation of US$1.9m for the year to December 2018. While we always look at total compensation first, we note that the salary component is less, at . 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$2.0b to US$6.4b. The median total CEO compensation was US$4.9m.
A first glance this seems like a real positive for shareholders, since Stuart Rothstein is paid less than the average total compensation paid by similar sized companies. Though positive, it's important we delve into the performance of the actual business.
You can see, below, how CEO compensation at Apollo Commercial Real Estate Finance has changed over time.
Is Apollo Commercial Real Estate Finance, Inc. Growing?
On average over the last three years, Apollo Commercial Real Estate Finance, Inc. has shrunk earnings per share by 6.4% each year (measured with a line of best fit). Its revenue is down 1.2% 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. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Shareholders might be interested in this free visualization of analyst forecasts.
Has Apollo Commercial Real Estate Finance, Inc. Been A Good Investment?
Most shareholders would probably be pleased with Apollo Commercial Real Estate Finance, Inc. for providing a total return of 44% over three years. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.
Apollo Commercial Real Estate Finance, Inc. is currently paying its CEO below what is normal for companies of its size.
Stuart Rothstein receives relatively low remuneration compared to similar sized companies. And while the company isn't growing earnings per share, total returns have been pleasing. So, while it would be nice to have EPS growth, on our analysis the CEO compensation is not an issue. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling Apollo Commercial Real Estate Finance (free visualization of insider trades).
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 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.
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.