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Why GEO Group's (NYSE:GEO) CEO Pay Matters

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Simply Wall St
·3 min read
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George Zoley became the CEO of The GEO Group, Inc. (NYSE:GEO) in 1994, 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 evaluate the appropriateness of CEO compensation when taking into account the funds from operations and shareholder returns of the company.

Check out our latest analysis for GEO Group

How Does Total Compensation For George Zoley Compare With Other Companies In The Industry?

Our data indicates that The GEO Group, Inc. has a market capitalization of US$1.4b, and total annual CEO compensation was reported as US$6.0m for the year to December 2019. That's a notable decrease of 13% on last year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$1.1m.

For comparison, other companies in the same industry with market capitalizations ranging between US$1.0b and US$3.2b had a median total CEO compensation of US$4.7m. So it looks like GEO Group compensates George Zoley in line with the median for the industry. Moreover, George Zoley also holds US$39m worth of GEO Group stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component

2019

2018

Proportion (2019)

Salary

US$1.1m

US$1.1m

19%

Other

US$4.9m

US$5.9m

81%

Total Compensation

US$6.0m

US$7.0m

100%

On an industry level, roughly 15% of total compensation represents salary and 85% is other remuneration. GEO Group pays out 19% of remuneration in the form of a salary, significantly higher than the industry average. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

ceo-compensation
ceo-compensation

The GEO Group, Inc.'s Growth

Over the last three years, The GEO Group, Inc. has not seen its funds from operations (FFO) change much, though they have deteriorated slightly. In the last year, its revenue is up 1.6%.

Its a bit disappointing to see that the company has failed to grow its FFO. And the modest revenue growth over 12 months isn't much comfort against the reduced FFO. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has The GEO Group, Inc. Been A Good Investment?

Since shareholders would have lost about 42% over three years, some The GEO Group, Inc. investors would surely be feeling negative emotions. So shareholders would probably want the company to be lessto generous with CEO compensation.

In Summary...

As previously discussed, George is compensated close to the median for companies of its size, and which belong to the same industry. In the meantime, the company has reported declining FFO growth and shareholder returns over the last three years. Considering overall performance, shareholders will likely hold off support for a raise until results improve.

CEO pay is simply one of the many factors that need to be considered while examining business performance. In our study, we found 3 warning signs for GEO Group you should be aware of, and 1 of them is concerning.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com.