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Rick Matros became the CEO of Sabra Health Care REIT, Inc. (NASDAQ:SBRA) in 2010, 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 Sabra Health Care REIT.
Comparing Sabra Health Care REIT, Inc.'s CEO Compensation With the industry
Our data indicates that Sabra Health Care REIT, Inc. has a market capitalization of US$3.7b, and total annual CEO compensation was reported as US$5.7m for the year to December 2019. Notably, that's an increase of 23% over the year before. While we always look at total compensation first, our analysis shows that the salary component is less, at US$900k.
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$5.1m. This suggests that Sabra Health Care REIT remunerates its CEO largely in line with the industry average. Moreover, Rick Matros also holds US$24m worth of Sabra Health Care REIT stock directly under their own name, which reveals to us that they have a significant personal stake in the company.
On an industry level, roughly 15% of total compensation represents salary and 85% is other remuneration. There isn't a significant difference between Sabra Health Care REIT and the broader market, in terms of salary allocation in the overall compensation package. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.
A Look at Sabra Health Care REIT, Inc.'s Growth Numbers
Sabra Health Care REIT, Inc. has seen its funds from operations (FFO) increase by 34% per year over the past three years. It achieved revenue growth of 3.6% over the last year.
This demonstrates that the company has been improving recently and is good news for the shareholders. It's also good to see modest revenue growth, suggesting the underlying business is healthy. 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 Sabra Health Care REIT, Inc. Been A Good Investment?
Sabra Health Care REIT, Inc. has served shareholders reasonably well, with a total return of 23% over three years. But they probably don't want to see the CEO paid more than is normal for companies around the same size.
As we touched on above, Sabra Health Care REIT, 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. But FFO growth over the last three years has been impressive, although the same cannot be said for shareholder returns. So considering these factors, we think the compensation is probably quite reasonable, but investor returns need a boost moving forward.
It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. In our study, we found 4 warning signs for Sabra Health Care REIT you should be aware of, and 1 of them is a bit unpleasant.
Important note: Sabra Health Care REIT 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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