This article will reflect on the compensation paid to John Thomas who has served as CEO of Physicians Realty Trust (NYSE:DOC) since 2013. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the funds from operations and shareholder returns of the company.
Comparing Physicians Realty Trust's CEO Compensation With the industry
According to our data, Physicians Realty Trust has a market capitalization of US$3.7b, and paid its CEO total annual compensation worth US$5.0m over the year to December 2019. Notably, that's an increase of 20% over the year before. We think total compensation is more important but our data shows that the CEO salary is lower, at US$840k.
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$5.2m. From this we gather that John Thomas is paid around the median for CEOs in the industry. Moreover, John Thomas also holds US$5.9m worth of Physicians Realty Trust stock directly under their own name, which reveals to us that they have a significant personal stake in the company.
On an industry level, around 15% of total compensation represents salary and 85% is other remuneration. It's interesting to note that Physicians Realty Trust pays out a greater portion of remuneration through salary, compared to the industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.
Physicians Realty Trust's Growth
Over the past three years, Physicians Realty Trust has seen its funds from operations (FFO) grow by 16% per year. Its revenue is up 5.6% over the last year.
This demonstrates that the company has been improving recently and is good news for the shareholders. It's good to see a bit of revenue growth, as this suggests the business is able to grow sustainably. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.
Has Physicians Realty Trust Been A Good Investment?
With a total shareholder return of 15% over three years, Physicians Realty Trust shareholders would, in general, be reasonably content. 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.
As previously discussed, John is compensated close to the median for companies of its size, and which belong to the same industry. But FFO growth for the company has been strong over the last three years, though shareholder returns in comparison haven't been as impressive. Considering overall performance, we'd say the compensation is fair, although stockholders will want to see higher returns moving forward.
We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. We did our research and identified 5 warning signs (and 1 which is potentially serious) in Physicians Realty Trust we think you should know about.
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.
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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