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Is H&R Real Estate Investment Trust's (TSE:HR.UN) CEO Pay Justified?

Simply Wall St

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Tom Hofstedter became the CEO of H&R Real Estate Investment Trust (TSE:HR.UN) in 1996. First, this article will compare CEO compensation with compensation at similar sized companies. Then we'll look at a snap shot of the business growth. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. The aim of all this is to consider the appropriateness of CEO pay levels.

See our latest analysis for H&R Real Estate Investment Trust

How Does Tom Hofstedter's Compensation Compare With Similar Sized Companies?

According to our data, H&R Real Estate Investment Trust has a market capitalization of CA$6.5b, and pays its CEO total annual compensation worth CA$4.1m. (This figure is for the year to December 2018). Notably, that's an increase of 10% over the year before. We think total compensation is more important but we note that the CEO salary is lower, at CA$1.2m. We examined companies with market caps from CA$5.3b to CA$16b, and discovered that the median CEO total compensation of that group was CA$6.0m.

This would give shareholders a good impression of the company, since most similar size companies have to pay more, leaving less for shareholders. Though positive, it's important we delve into the performance of the actual business.

The graphic below shows how CEO compensation at H&R Real Estate Investment Trust has changed from year to year.

TSX:HR.UN CEO Compensation, June 10th 2019

Is H&R Real Estate Investment Trust Growing?

On average over the last three years, H&R Real Estate Investment Trust has grown earnings per share (EPS) by 14% each year (using a line of best fit). In the last year, its revenue is down -3.5%.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. Revenue growth is a real positive for growth, but ultimately profits are more important. You might want to check this free visual report on analyst forecasts for future earnings.

Has H&R Real Estate Investment Trust Been A Good Investment?

H&R Real Estate Investment Trust has served shareholders reasonably well, with a total return of 25% over three years. But they would probably prefer not to see CEO compensation far in excess of the median.

In Summary...

It appears that H&R Real Estate Investment Trust remunerates its CEO below most similar sized companies. Considering the underlying business is growing earnings, this would suggest the pay is modest. While returns over the last few years haven't been top notch, there is nothing to suggest to us that Tom Hofstedter is overcompensated.

It's great to see a company that pays its CEO reasonably, even while growing. It would be an additional positive if insiders are buying shares. So you may want to check if insiders are buying H&R Real Estate Investment Trust shares with their own money (free access).

If you want to buy a stock that is better than H&R Real Estate Investment Trust, this free list of high return, low debt companies is a great place to look.

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 editorial-team@simplywallst.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.