Paul McDermott became the CEO of Washington Real Estate Investment Trust (NYSE:WRE) in 2013, 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 look to assess whether the CEO is appropriately paid, considering recent funds from operations growth and investor returns for Washington Real Estate Investment Trust.
How Does Total Compensation For Paul McDermott Compare With Other Companies In The Industry?
According to our data, Washington Real Estate Investment Trust has a market capitalization of US$1.8b, and paid its CEO total annual compensation worth US$3.9m over the year to December 2019. That's a notable increase of 9.2% on last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$650k.
On examining similar-sized companies in the industry with market capitalizations between US$1.0b and US$3.2b, we discovered that the median CEO total compensation of that group was US$4.4m. So it looks like Washington Real Estate Investment Trust compensates Paul McDermott in line with the median for the industry. Moreover, Paul McDermott also holds US$7.5m worth of Washington Real Estate Investment Trust stock directly under their own name, which reveals to us that they have a significant personal stake in the company.
Talking in terms of the industry, salary represented approximately 15% of total compensation out of all the companies we analyzed, while other remuneration made up 85% of the pie. It's interesting to note that Washington Real Estate Investment 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.
Washington Real Estate Investment Trust's Growth
Over the last three years, Washington Real Estate Investment Trust has shrunk its funds from operations (FFO) by 3.2% per year. Its revenue is up 1.1% over the last year.
Few shareholders would be pleased to read that FFO have declined. The modest increase in revenue in the last year isn't enough to make us overlook the disappointing change in FFO. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.
Has Washington Real Estate Investment Trust Been A Good Investment?
Since shareholders would have lost about 18% over three years, some Washington Real Estate Investment Trust 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, Washington Real Estate Investment Trust 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. On the other hand, FFO growth and total shareholder return have been negative for the last three years. It's tough to call out the compensation as inappropriate, but shareholders might not favor a raise before company performance improves.
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 4 warning signs (and 1 which makes us a bit uncomfortable) in Washington Real Estate Investment 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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