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Performance at American Assets Trust, Inc. (NYSE:AAT) has been reasonably good and CEO Ernest Rady has done a decent job of steering the company in the right direction. As shareholders go into the upcoming AGM on 08 June 2021, CEO compensation will probably not be their focus, but rather the steps management will take to continue the growth momentum. We present our case of why we think CEO compensation looks fair.
Comparing American Assets Trust, Inc.'s CEO Compensation With the industry
According to our data, American Assets Trust, Inc. has a market capitalization of US$2.9b, and paid its CEO total annual compensation worth US$4.4m over the year to December 2020. That's a notable increase of 17% on last year. While we always look at total compensation first, our analysis shows that the salary component is less, at US$600k.
On examining similar-sized companies in the industry with market capitalizations between US$2.0b and US$6.4b, we discovered that the median CEO total compensation of that group was US$5.4m. From this we gather that Ernest Rady is paid around the median for CEOs in the industry. Furthermore, Ernest Rady directly owns US$278m worth of shares in the company, implying that they are deeply invested in the company's success.
On an industry level, around 15% of total compensation represents salary and 85% is other remuneration. American Assets Trust sets aside a smaller share of compensation for salary, in comparison to the overall industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.
American Assets Trust, Inc.'s Growth
American Assets Trust, Inc.'s funds from operations (FFO) grew 11% per yearover the last three years. It saw its revenue drop 12% over the last year.
This demonstrates that the company has been improving recently and is good news for the shareholders. The lack of revenue growth isn't ideal, but it is the bottom line that counts most in business. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..
Has American Assets Trust, Inc. Been A Good Investment?
American Assets Trust, Inc. has served shareholders reasonably well, with a total return of 10% over three years. But they probably wouldn't be so happy as to think the CEO should be paid more than is normal, for companies around this size.
The company's decent performance might have made most shareholders happy, possibly making CEO remuneration the least of the concerns to be discussed in the upcoming AGM. Despite the pleasing results, we still think that any proposed increases to CEO compensation will be examined based on a case by case basis and linked to performance outcomes.
It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. We did our research and identified 3 warning signs (and 1 which is potentially serious) in American Assets Trust we think you should know about.
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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