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Despite One Liberty Properties, Inc.'s (NYSE:OLP) share price growing positively in the past few years, the per-share earnings growth has not grown to investors' expectations, suggesting that there could be other factors at play driving the share price. Some of these issues will occupy shareholders' minds as the AGM rolls around on 10 June 2021. One way that shareholders can influence managerial decisions is through voting on CEO and executive remuneration packages, which studies show could impact company performance. From what we gathered, we think shareholders should be wary of raising CEO compensation until the company shows some marked improvement.
How Does Total Compensation For Patrick Callan Compare With Other Companies In The Industry?
Our data indicates that One Liberty Properties, Inc. has a market capitalization of US$548m, and total annual CEO compensation was reported as US$1.8m for the year to December 2020. This means that the compensation hasn't changed much from last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$865k.
For comparison, other companies in the same industry with market capitalizations ranging between US$200m and US$800m had a median total CEO compensation of US$2.0m. So it looks like One Liberty Properties compensates Patrick Callan in line with the median for the industry. Moreover, Patrick Callan also holds US$7.2m worth of One Liberty Properties 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. One Liberty Properties is paying a higher share of its remuneration through a salary in comparison to the overall industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.
A Look at One Liberty Properties, Inc.'s Growth Numbers
One Liberty Properties, Inc. has reduced its funds from operations (FFO) by 3.4% per year over the last three years. Its revenue is down 3.3% over the previous year.
Few shareholders would be pleased to read that FFO have declined. And the impression is worse when you consider revenue is down year-on-year. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..
Has One Liberty Properties, Inc. Been A Good Investment?
One Liberty Properties, Inc. has generated a total shareholder return of 30% over three years, so most shareholders would be reasonably content. But they probably don't want to see the CEO paid more than is normal for companies around the same size.
Despite the positive returns on shareholders' investments, the fact that earnings have failed to grow makes us skeptical about whether these returns will continue. The upcoming AGM will provide shareholders the opportunity to revisit the company’s remuneration policies and evaluate if the board’s judgement and decision-making is aligned with that of the company’s shareholders.
CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. That's why we did our research, and identified 5 warning signs for One Liberty Properties (of which 2 don't sit too well with us!) that you should know about in order to have a holistic understanding of the stock.
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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