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Why QTS Realty Trust's (NYSE:QTS) CEO Pay Matters

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Simply Wall St
·4 min read
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Chad Williams has been the CEO of QTS Realty Trust, Inc. (NYSE:QTS) since 2013, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also look to assess whether the CEO is appropriately paid, considering recent funds from operations growth and investor returns for QTS Realty Trust.

Check out our latest analysis for QTS Realty Trust

How Does Total Compensation For Chad Williams Compare With Other Companies In The Industry?

According to our data, QTS Realty Trust, Inc. has a market capitalization of US$4.6b, and paid its CEO total annual compensation worth US$7.7m over the year to December 2019. We note that's an increase of 22% above last year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$720k.

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$5.4m. Hence, we can conclude that Chad Williams is remunerated higher than the industry median. Moreover, Chad Williams also holds US$21m worth of QTS Realty Trust 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$720k

US$720k

9%

Other

US$7.0m

US$5.6m

91%

Total Compensation

US$7.7m

US$6.3m

100%

Speaking on an industry level, nearly 15% of total compensation represents salary, while the remainder of 85% is other remuneration. It's interesting to note that QTS Realty Trust allocates a smaller portion of compensation to salary in comparison to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

ceo-compensation
ceo-compensation

A Look at QTS Realty Trust, Inc.'s Growth Numbers

QTS Realty Trust, Inc. has seen its funds from operations (FFO) increase by 8.1% per year over the past three years. It achieved revenue growth of 11% over the last year.

This revenue growth could really point to a brighter future. And the improvement in FFOis modest but respectable. So while performance isn't amazing, we think it really does seem quite respectable. 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 QTS Realty Trust, Inc. Been A Good Investment?

Most shareholders would probably be pleased with QTS Realty Trust, Inc. for providing a total return of 39% over three years. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.

To Conclude...

As we noted earlier, QTS Realty Trust pays its CEO higher than the norm for similar-sized companies belonging to the same industry. Importantly though, shareholder returns for the last three years have been excellent. That's why we were hoping FFO growth would match this growth, but sadly that is not the case. All things considered, we don't think there's a reason to criticize CEO compensation, though we hope QTS Realty Trust will post healthier FFO growth moving forward.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. We identified 4 warning signs for QTS Realty Trust (1 is a bit concerning!) that you should be aware of before investing here.

Important note: QTS Realty Trust 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.

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