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How Should Investors Feel About City Office REIT, Inc.'s (NYSE:CIO) CEO Pay?

Simply Wall St

Jamie Farrar became the CEO of City Office REIT, Inc. (NYSE:CIO) in 2014. First, this article will compare CEO compensation with compensation at similar sized companies. Next, we'll consider growth that the business demonstrates. And finally - as a second measure of performance - we will look at the returns shareholders have received over the last few years. This method should give us information to assess how appropriately the company pays the CEO.

Check out our latest analysis for City Office REIT

How Does Jamie Farrar's Compensation Compare With Similar Sized Companies?

At the time of writing, our data says that City Office REIT, Inc. has a market cap of US$725m, and reported total annual CEO compensation of US$1.6m for the year to December 2018. While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at US$400k. Importantly, there may be performance hurdles relating to the non-salary component of the total compensation. When we examined a selection of companies with market caps ranging from US$400m to US$1.6b, we found the median CEO total compensation was US$2.6m.

Most shareholders would consider it a positive that Jamie Farrar takes less total compensation than the CEOs of most similar size companies, leaving more for shareholders. Though positive, it's important we delve into the performance of the actual business.

You can see a visual representation of the CEO compensation at City Office REIT, below.

NYSE:CIO CEO Compensation, November 10th 2019

Is City Office REIT, Inc. Growing?

Over the last three years City Office REIT, Inc. has grown its earnings per share (EPS) by an average of 1.2% per year (using a line of best fit). In the last year, its revenue is up 20%.

I would argue that the modest growth in revenue is a notable positive. And, while modest, the earnings per share growth is noticeable. So while performance isn't amazing, we think it really does seem quite respectable. You might want to check this free visual report on analyst forecasts for future earnings.

Has City Office REIT, Inc. Been A Good Investment?

I think that the total shareholder return of 37%, over three years, would leave most City Office REIT, Inc. shareholders smiling. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

In Summary...

It looks like City Office REIT, Inc. pays its CEO less than similar sized companies.

It's well worth noting that while Jamie Farrar is paid below what is normal at companies of similar size, the returns have been very pleasing, over the last three years. So, while it might be nice to have better EPS growth, on our analysis the CEO compensation is quite modest. Whatever your view on compensation, you might want to check if insiders are buying or selling City Office REIT shares (free trial).

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.

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.