We discuss why the CEO of Innovative Industrial Properties, Inc. (NYSE: IIPR) needs to raise his salaries
The strong performance at Innovative Industrial Properties, Inc. (NYSE: IIPR) has been impressive, and shareholders will likely be delighted to know that CEO Paul Smithers has kept his promises. This will be kept in mind at the next annual general meeting on June 4, 2021, which will be an opportunity for them to hear the board of directors review the financial results, discuss the future strategy of the company and vote. on resolutions such as executive compensation and other matters. Let’s see why we think the CEO did a good job and we’ll make the case for a pay rise.
Check out our latest analysis for innovative industrial properties
How does Paul Smithers’ total compensation compare to other companies in the industry?
At the time of writing, our data shows that Innovative Industrial Properties, Inc. has a market capitalization of US $ 4.3 billion and reported total annual CEO compensation of US $ 1.9 million for the year until December 2020. This is notably an increase of 32%. the previous year. While we always look at total compensation first, our analysis shows that the salary component is smaller, at US $ 420,000.
Comparing similar companies in the same industry with market capitalizations ranging from US $ 2.0 billion to US $ 6.4 billion, we found that the median total CEO compensation was US $ 5.3 million. Simply put, Paul Smithers is paid below the industry median. Additionally, Paul Smithers owns $ 5.7 million in company stock in his own name, indicating that they have a lot of skin in the game.
|Salary||US $ 420K||400,000 USD||23%|
|Other||1.4 million USD||$ 1.0 million||77%|
|Total compensation||$ 1.9 million||1.4 million USD||100%|
At the industry level, around 15% of total compensation is salary and 85% other compensation. According to our research, Innovative Industrial Properties allocated a higher percentage of salary to salary compared to the industry as a whole. If the total compensation is oriented towards non-salary benefits, this indicates that the CEO’s compensation is linked to the performance of the company.
A look at the growth figures of Innovative Industrial Properties, Inc.
Innovative Industrial Properties, Inc. has seen its Funds From Operations (FFO) increase by 279% per year over the past three years. Last year, its turnover increased by 135%.
Shareholders would be happy to know that the company has improved over the past few years. The combination of strong revenue growth and improving FFOs over the medium term certainly indicates the kind of growth we like to see. Stepping away from the current shape for a second, it might be important to check out this free visual representation of what analysts expect for the future.
Has Innovative Industrial Properties, Inc. been a good investment?
Most shareholders would likely be happy with Innovative Industrial Properties, Inc. for its three-year total return of 427%. As a result, some may think that the CEO should be paid more than normal for companies of similar size.
Since the company has performed relatively well, the CEO compensation policy may not be the focus of the AGM. In fact, strategic decisions that could impact the future of the business could be a much more interesting topic for investors, as it would help them set their long-term expectations.
While paying attention to CEOs is important, investors should consider other parts of the business as well. We have identified 3 warning signs for innovative industrial properties which investors should be aware of in a dynamic business environment.
Arguably, the quality of the business is much more important than the compensation levels of CEOs. So look at this free list of interesting companies that have high return on equity and low leverage.
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