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What Does Summit Hotel Properties' (NYSE:INN) CEO Pay Reveal?

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·4 min read
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This article will reflect on the compensation paid to Dan Hansen who has served as CEO of Summit Hotel Properties, Inc. (NYSE:INN) since 2010. This analysis will also assess whether Summit Hotel Properties pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

Note: The company does not report funds from operations, and as a result, we have used earnings per share in our analysis.

See our latest analysis for Summit Hotel Properties

Comparing Summit Hotel Properties, Inc.'s CEO Compensation With the industry

According to our data, Summit Hotel Properties, Inc. has a market capitalization of US$642m, and paid its CEO total annual compensation worth US$5.0m over the year to December 2019. That's a notable increase of 14% on last year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$700k.

On examining similar-sized companies in the industry with market capitalizations between US$400m and US$1.6b, we discovered that the median CEO total compensation of that group was US$4.0m. So it looks like Summit Hotel Properties compensates Dan Hansen in line with the median for the industry. What's more, Dan Hansen holds US$7.5m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component

2019

2018

Proportion (2019)

Salary

US$700k

US$700k

14%

Other

US$4.3m

US$3.7m

86%

Total Compensation

US$5.0m

US$4.4m

100%

Talking in terms of the industry, salary represented approximately 15% of total compensation out of all the companies we analyzed, while other remuneration made up 85% of the pie. Although there is a difference in how total compensation is set, Summit Hotel Properties more or less reflects the market in terms of setting the salary. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

ceo-compensation
ceo-compensation

A Look at Summit Hotel Properties, Inc.'s Growth Numbers

Summit Hotel Properties, Inc. has reduced its earnings per share by 35% a year over the last three years. It saw its revenue drop 28% over the last year.

Overall this is not a very positive result for shareholders. This is compounded by the fact revenue is actually down on last year. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.

Has Summit Hotel Properties, Inc. Been A Good Investment?

With a three year total loss of 54% for the shareholders, Summit Hotel Properties, Inc. would certainly have some dissatisfied shareholders. So shareholders would probably want the company to be lessto generous with CEO compensation.

To Conclude...

As we touched on above, Summit Hotel Properties, Inc. is currently paying a compensation that's close to the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. Meanwhile, EPS growth and shareholder returns have been in the red for the last three years. It's tough to call out the compensation as inappropriate, but shareholders might not favor a raise before company performance improves.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. We identified 2 warning signs for Summit Hotel Properties (1 shouldn't be ignored!) that you should be aware of before investing here.

Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.

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. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com.