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Is Retail Properties of America, Inc.'s (NYSE:RPAI) CEO Pay Justified?

Simply Wall St

Steve Grimes became the CEO of Retail Properties of America, Inc. (NYSE:RPAI) in 2009. First, this article will compare CEO compensation with compensation at similar sized companies. Next, we'll consider growth that the business demonstrates. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. The aim of all this is to consider the appropriateness of CEO pay levels.

See our latest analysis for Retail Properties of America

How Does Steve Grimes's Compensation Compare With Similar Sized Companies?

According to our data, Retail Properties of America, Inc. has a market capitalization of US$2.8b, and paid its CEO total annual compensation worth US$5.3m over the year to December 2018. While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at US$850k. Importantly, there may be performance hurdles relating to the non-salary component of the total compensation. We examined companies with market caps from US$2.0b to US$6.4b, and discovered that the median CEO total compensation of that group was US$5.1m.

So Steve Grimes is paid around the average of the companies we looked at. This doesn't tell us a whole lot on its own, but looking at the performance of the actual business will give us useful context.

You can see, below, how CEO compensation at Retail Properties of America has changed over time.

NYSE:RPAI CEO Compensation, October 22nd 2019

Is Retail Properties of America, Inc. Growing?

On average over the last three years, Retail Properties of America, Inc. has shrunk earnings per share by 9.6% each year (measured with a line of best fit). In the last year, its revenue is down 4.6%.

Sadly for shareholders, earnings per share are actually down, over three years. This is compounded by the fact revenue is actually down on last year. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. You might want to check this free visual report on analyst forecasts for future earnings.

Has Retail Properties of America, Inc. Been A Good Investment?

With a three year total loss of 0.9%, Retail Properties of America, Inc. would certainly have some dissatisfied shareholders. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

Remuneration for Steve Grimes is close enough to the median pay for a CEO of a similar sized company .

Returns have been disappointing and the company is not growing its earnings per share. Few would argue that it's wise for the company to pay any more, before returns improve. If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at Retail Properties of America.

Important note: Retail Properties of America may not be the best stock to buy. You might find something better in this list of interesting companies with high ROE and low debt.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.