Why Morguard Real Estate Investment Trust's (TSE:MRT.UN) CEO Pay Matters

Kuldip Sahi became the CEO of Morguard Real Estate Investment Trust (TSE:MRT.UN) in 2001, 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 Morguard Real Estate Investment Trust

How Does Total Compensation For Kuldip Sahi Compare With Other Companies In The Industry?

Our data indicates that Morguard Real Estate Investment Trust has a market capitalization of CA$297m, and total annual CEO compensation was reported as CA$100k for the year to December 2019. This means that the compensation hasn't changed much from last year. It is worth noting that the CEO compensation consists entirely of the salary, worth CA$100k.

For comparison, other companies in the same industry with market capitalizations ranging between CA$132m and CA$529m had a median total CEO compensation of CA$500k. Accordingly, Morguard Real Estate Investment Trust pays its CEO under the industry median. Furthermore, Kuldip Sahi directly owns CA$5.5m worth of shares in the company, implying that they are deeply invested in the company's success.

Speaking on an industry level, nearly 32% of total compensation represents salary, while the remainder of 68% is other remuneration. At the company level, Morguard Real Estate Investment Trust pays Kuldip Sahi solely through a salary, preferring to go down a conventional route. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.

Morguard Real Estate Investment Trust's Growth

Morguard Real Estate Investment Trust has reduced its funds from operations (FFO) by 8.1% per year over the last three years. It saw its revenue drop 5.5% over the last year.

Few shareholders would be pleased to read that FFO have declined. And the impression is worse when you consider revenue is down year-on-year. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. 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 Morguard Real Estate Investment Trust Been A Good Investment?

With a three year total loss of 59% for the shareholders, Morguard Real Estate Investment Trust would certainly have some dissatisfied shareholders. So shareholders would probably want the company to be lessto generous with CEO compensation.

In Summary...

Morguard Real Estate Investment Trust rewards its CEO solely through a salary, ignoring non-salary benefits completely. As previously discussed, Kuldip is compensated less than what is normal for CEOs of companies of similar size, and which belong to the same industry. FFO growth has failed to impress us, and the same can be said about shareholder returns. We can't say the CEO compensation is high, but shareholders will be cold to a bump at this stage, considering negative investor returns.

CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. That's why we did our research, and identified 2 warning signs for Morguard Real Estate Investment Trust (of which 1 is potentially serious!) that you should know about in order to have a holistic understanding of the stock.

Important note: Morguard Real Estate Investment 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.

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