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Damon Hininger became the CEO of CoreCivic, Inc. (NYSE:CXW) in 2009, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the funds from operations and shareholder returns of the company.
How Does Total Compensation For Damon Hininger Compare With Other Companies In The Industry?
Our data indicates that CoreCivic, Inc. has a market capitalization of US$756m, and total annual CEO compensation was reported as US$5.3m for the year to December 2019. Notably, that's an increase of 30% over the year before. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$940k.
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$4.1m. So it looks like CoreCivic compensates Damon Hininger in line with the median for the industry. Furthermore, Damon Hininger directly owns US$1.7m worth of shares in the company.
On an industry level, roughly 15% of total compensation represents salary and 85% is other remuneration. CoreCivic pays out 18% of remuneration in the form of a salary, significantly higher than the industry average. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.
CoreCivic, Inc.'s Growth
Over the last three years, CoreCivic, Inc. has shrunk its funds from operations (FFO) by 4.8% per year. It achieved revenue growth of 2.6% over the last year.
Overall this is not a very positive result for shareholders. The fairly low revenue growth fails to impress given that the FFO is down. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..
Has CoreCivic, Inc. Been A Good Investment?
Since shareholders would have lost about 67% over three years, some CoreCivic, Inc. investors would surely be feeling negative emotions. Therefore, it might be upsetting for shareholders if the CEO were paid generously.
As we touched on above, CoreCivic, 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. In the meantime, the company has reported declining FFO growth and shareholder returns over the last three years. Considering overall performance, shareholders will likely hold off support for a raise until results improve.
CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. We identified 4 warning signs for CoreCivic (2 are significant!) that you should be aware of before investing here.
Important note: CoreCivic is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.
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.
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