C. Pickett has been the CEO of Omega Healthcare Investors, Inc. (NYSE:OHI) since 2001. 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. The aim of all this is to consider the appropriateness of CEO pay levels.
How Does C. Pickett's Compensation Compare With Similar Sized Companies?
At the time of writing, our data says that Omega Healthcare Investors, Inc. has a market cap of US$6.5b, and reported total annual CEO compensation of US$6.6m for the year to December 2018. While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at US$780k. We note that more than half of the total compensation is not the salary; and performance requirements may apply to this non-salary portion. When we examined a selection of companies with market caps ranging from US$4.0b to US$12b, we found the median CEO total compensation was US$7.4m.
Now let's take a look at the pay mix on an industry and company level to gain a better understanding of where Omega Healthcare Investors stands. Speaking on an industry level, we can see that nearly 15% of total compensation represents salary, while the remainder of 85% is other remuneration. Omega Healthcare Investors does not set aside a larger portion of remuneration in the form of salary, maintaining the same rate as the wider market.
That means C. Pickett 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 Omega Healthcare Investors, below.
Is Omega Healthcare Investors, Inc. Growing?
Over the last three years Omega Healthcare Investors, Inc. has shrunk its earnings per share by an average of 4.3% per year (measured with a line of best fit). It achieved revenue growth of 5.3% over the last year.
Sadly for shareholders, earnings per share are actually down, over three years. The fairly low revenue growth fails to impress given that the earnings per share is down. 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 Omega Healthcare Investors, Inc. Been A Good Investment?
With a total shareholder return of 19% over three years, Omega Healthcare Investors, Inc. 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.
C. Pickett is paid around what is normal for the leaders of comparable size companies.
We're not seeing great strides in earnings per share, and total returns were decent but not amazing in the last three years. We do not think the CEO pay is a problem, but one might argue that the company should improve returns to shareholders before increasing it. On another note, Omega Healthcare Investors has 4 warning signs (and 1 which is potentially serious) we think you should know about.
Important note: Omega Healthcare Investors 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.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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.