What Can We Learn About Scully Royalty's (NYSE:SRL) CEO Compensation?
This article will reflect on the compensation paid to Michael Smith who has served as CEO of Scully Royalty Ltd. (NYSE:SRL) since 2017. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Scully Royalty.
View our latest analysis for Scully Royalty
Comparing Scully Royalty Ltd.'s CEO Compensation With the industry
At the time of writing, our data shows that Scully Royalty Ltd. has a market capitalization of US$98m, and reported total annual CEO compensation of CA$867k for the year to December 2019. That's a modest increase of 5.2% on the prior year. We note that the salary portion, which stands at CA$556.4k constitutes the majority of total compensation received by the CEO.
For comparison, other companies in the industry with market capitalizations below US$200m, reported a median total CEO compensation of CA$478k. Accordingly, our analysis reveals that Scully Royalty Ltd. pays Michael Smith north of the industry median. Moreover, Michael Smith also holds US$849k worth of Scully Royalty stock directly under their own name.
Component | 2019 | 2018 | Proportion (2019) |
Salary | CA$556k | CA$543k | 64% |
Other | CA$310k | CA$281k | 36% |
Total Compensation | CA$867k | CA$824k | 100% |
Speaking on an industry level, nearly 14% of total compensation represents salary, while the remainder of 86% is other remuneration. Scully Royalty is paying a higher share of its remuneration through a salary in comparison to the overall industry. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.
Scully Royalty Ltd.'s Growth
Scully Royalty Ltd.'s earnings per share (EPS) grew 73% per year over the last three years. It saw its revenue drop 3.9% over the last year.
This demonstrates that the company has been improving recently and is good news for the shareholders. While it would be good to see revenue growth, profits matter more in the end. We don't have analyst forecasts, but you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.
Has Scully Royalty Ltd. Been A Good Investment?
Given the total shareholder loss of 15% over three years, many shareholders in Scully Royalty Ltd. are probably rather dissatisfied, to say the least. So shareholders would probably want the company to be lessto generous with CEO compensation.
In Summary...
As previously discussed, Michael is compensated more than what is normal for CEOs of companies of similar size, and which belong to the same industry. But the company has impressed with its EPS growth, but shareholder returns — over the same period — have been disappointing. Although we'd stop short of calling it inappropriate, we think Michael is earning a very handsome sum.
While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. We did our research and spotted 1 warning sign for Scully Royalty that investors should look into moving forward.
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.
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