Yahoo Finance We Take A Look At Whether Innovative Industrial Properties, Inc.'s (NYSE:IIPR) CEO May Be Underpaid
The solid performance at Innovative Industrial Properties, Inc. (NYSE:IIPR) has been impressive and shareholders will probably be pleased to know that CEO Paul Smithers has delivered. This would be kept in mind at the upcoming AGM on 04 June 2021 which will be a chance for them to hear the board review the financial results, discuss future company strategy and vote on resolutions such as executive remuneration and other matters. Let's take a look at why we think the CEO has done a good job and we'll present the case for a bump in pay.
View our latest analysis for Innovative Industrial Properties
How Does Total Compensation For Paul Smithers Compare With Other Companies In The Industry?
According to our data, Innovative Industrial Properties, Inc. has a market capitalization of US$4.3b, and paid its CEO total annual compensation worth US$1.9m over the year to December 2020. We note that's an increase of 32% above last year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$420k.
In comparison with other companies in the industry with market capitalizations ranging from US$2.0b to US$6.4b, the reported median CEO total compensation was US$5.3m. This suggests that Paul Smithers is paid below the industry median. Moreover, Paul Smithers also holds US$5.7m worth of Innovative Industrial Properties stock directly under their own name, which reveals to us that they have a significant personal stake in the company.
Component | 2020 | 2019 | Proportion (2020) |
Salary | US$420k | US$400k | 23% |
Other | US$1.4m | US$1.0m | 77% |
Total Compensation | US$1.9m | US$1.4m | 100% |
On an industry level, roughly 15% of total compensation represents salary and 85% is other remuneration. Innovative Industrial 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 Innovative Industrial Properties, Inc.'s Growth Numbers
Innovative Industrial Properties, Inc.'s funds from operations (FFO) grew 279% per yearover the last three years. It achieved revenue growth of 135% over the last year.
This demonstrates that the company has been improving recently and is good news for the shareholders. Most shareholders would be pleased to see strong revenue growth combined with FFO growth. This combo suggests a fast growing business. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.
Has Innovative Industrial Properties, Inc. Been A Good Investment?
We think that the total shareholder return of 427%, over three years, would leave most Innovative Industrial Properties, Inc. shareholders smiling. 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...
The company's solid performance might have made most shareholders happy, possibly making CEO remuneration the least of the matters to be discussed in the AGM. Instead, investors might be more interested in discussions that would help manage their longer-term growth expectations such as company business strategies and future growth potential.
CEO compensation can have a massive impact on performance, but it's just one element. We've identified 3 warning signs for Innovative Industrial Properties that investors should be aware of in a dynamic business environment.
Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.
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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