A Quick Analysis On Innovative Industrial Properties’ (NYSE:IIPR) CEO Compensation

Lenore Staats

Paul Smithers has been the CEO of Innovative Industrial Properties, Inc. (NYSE:IIPR) since 2016, and this article will examine the executive’s compensation with respect to the overall performance of the company. This analysis will also assess whether Innovative Industrial Properties pays its CEO appropriately, considering its funds from operations growth […]

Paul Smithers has been the CEO of Innovative Industrial Properties, Inc. (NYSE:IIPR) since 2016, and this article will examine the executive’s compensation with respect to the overall performance of the company. This analysis will also assess whether Innovative Industrial Properties pays its CEO appropriately, considering its funds from operations growth and total shareholder returns.

Check out our latest analysis for Innovative Industrial Properties

Comparing Innovative Industrial Properties, Inc.’s CEO Compensation With the industry

At the time of writing, our data shows that Innovative Industrial Properties, Inc. has a market capitalization of US$2.7b, and reported total annual CEO compensation of US$1.4m for the year to December 2019. We note that’s an increase of 31% above last year. While this analysis focuses on total compensation, it’s worth acknowledging that the salary portion is lower, valued at US$400k.

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$5.4m. This suggests that Paul Smithers is paid below the industry median. Furthermore, Paul Smithers directly owns US$5.0m worth of shares in the company, implying that they are deeply invested in the company’s success.

Component 2019 2018 Proportion (2019)
Salary US$400k US$360k 28%
Other US$1.0m US$718k 72%
Total Compensation US$1.4m US$1.1m 100%

On an industry level, around 15% of total compensation represents salary and 85% is other remuneration. According to our research, Innovative Industrial Properties has allocated a higher percentage of pay to salary in comparison to the wider industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

Innovative Industrial Properties, Inc.’s Growth

Over the past one year, Innovative Industrial Properties, Inc. has seen its funds from operations (FFO) grow by 294% . Its revenue is up 208% over the last year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. It’s great to see that revenue growth is strong, too. These metrics suggest the business is growing strongly. Looking ahead, you might want to check this free visual report on analyst forecasts for the company’s future earnings..

Has Innovative Industrial Properties, Inc. Been A Good Investment?

Most shareholders would probably be pleased with Innovative Industrial Properties, Inc. for providing a total return of 709% 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.

In Summary…

As we touched on above, Innovative Industrial Properties, Inc. is currently paying its CEO below the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. Since FFO growth is heading in a positive direction; many would agree with our assessment that the pay is modest. And given most shareholders are probably very happy with recent shareholder returns, they might even think Paul deserves a raise!

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 3 warning signs for Innovative Industrial Properties (1 is a bit unpleasant!) that you should be aware of before investing here.

Switching gears from Innovative Industrial Properties, if you’re hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.

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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