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Is Independence Realty Trust, Inc. (NYSE:IRT) Excessively Paying Its CEO?

Simply Wall St

Scott Schaeffer has been the CEO of Independence Realty Trust, Inc. (NYSE:IRT) since 2013. This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. Next, we’ll consider growth that the business demonstrates. Third, we’ll reflect on the total return to shareholders over three years, as a second measure of business performance. This method should give us information to assess how appropriately the company pays the CEO.

View our latest analysis for Independence Realty Trust

How Does Scott Schaeffer’s Compensation Compare With Similar Sized Companies?

Our data indicates that Independence Realty Trust, Inc. is worth US$934m, and total annual CEO compensation is US$2.9m. (This figure is for the year to December 2017). We think total compensation is more important but we note that the CEO salary is lower, at US$619k. As part of our analysis we looked at companies in the same jurisdiction, with market capitalizations of US$400m to US$1.6b. The median total CEO compensation was US$2.2m.

Thus we can conclude that Scott Schaeffer receives more in total compensation than the median of a group of companies in the same market, and of similar size to Independence Realty Trust, Inc.. However, this doesn’t necessarily mean the pay is too high. We can get a better idea of how generous the pay is by looking at the performance of the underlying business.

The graphic below shows how CEO compensation at Independence Realty Trust has changed from year to year.

NYSE:IRT CEO Compensation, March 13th 2019
NYSE:IRT CEO Compensation, March 13th 2019

Is Independence Realty Trust, Inc. Growing?

On average over the last three years, Independence Realty Trust, Inc. has shrunk earnings per share by 49% each year (measured with a line of best fit). It achieved revenue growth of 19% over the last year.

Sadly for shareholders, earnings per share are actually down, over three years. While the revenue growth is good to see, it is outweighed by the fact that earnings per share are down, over three years. These factors suggest that the business performance wouldn’t really justify a high pay packet for the CEO. You might want to check this free visual report on analyst forecasts for future earnings.

Has Independence Realty Trust, Inc. Been A Good Investment?

I think that the total shareholder return of 97%, over three years, would leave most Independence Realty Trust, Inc. shareholders smiling. This strong performance might mean some shareholders don’t mind if the CEO were to be paid more than is normal for a company of its size.

In Summary…

We examined the amount Independence Realty Trust, Inc. pays its CEO, and compared it to the amount paid by similar sized companies. We found that it pays well over the median amount paid in the benchmark group.

Neither earnings per share nor revenue have been growing sufficiently fast to impress us, over the last three years.

On the other hand, returns have been good, so the company is doing something right. Considering this, shareholders are probably not too worried about the CEO compensation. Whatever your view on compensation, you might want to check if insiders are buying or selling Independence Realty Trust shares (free trial).

If you want to buy a stock that is better than Independence Realty 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.