Despite positive share price growth of 20% for Ventas, Inc. (NYSE:VTR) over the last few years, earnings growth has been disappointing, which suggests something is amiss. The upcoming AGM on 25 May 2021 may be an opportunity for shareholders to bring up any concerns they may have for the board’s attention. One way that shareholders can influence managerial decisions is through voting on CEO and executive remuneration packages, which studies show could impact company performance. In our analysis below, we show why shareholders may consider holding off a raise for the CEO’s compensation until company performance improves.
View our latest analysis for Ventas
How Does Total Compensation For Deb Cafaro Compare With Other Companies In The Industry?
At the time of writing, our data shows that Ventas, Inc. has a market capitalization of US$20b, and reported total annual CEO compensation of US$13m for the year to December 2020. That’s a notable increase of 11% on last year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$948k.
In comparison with other companies in the industry with market capitalizations over US$8.0b , the reported median total CEO compensation was US$7.8m. Accordingly, our analysis reveals that Ventas, Inc. pays Deb Cafaro north of the industry median. Furthermore, Deb Cafaro directly owns US$41m worth of shares in the company, implying that they are deeply invested in the company’s success.
| Component | 2020 | 2019 | Proportion (2020) |
| Salary | US$948k | US$1.1m | 8% |
| Other | US$12m | US$10m | 92% |
| Total Compensation | US$13m | US$11m | 100% |
On an industry level, roughly 15% of total compensation represents salary and 85% is other remuneration. Ventas sets aside a smaller share of compensation for salary, in comparison to the overall industry. If non-salary compensation dominates total pay, it’s an indicator that the executive’s salary is tied to company performance.
NYSE:VTR CEO Compensation May 19th 2021
Ventas, Inc.’s Growth
Over the last three years, Ventas, Inc. has shrunk its funds from operations (FFO) by 12% per year. In the last year, its revenue is down 5.1%.
Few shareholders would be pleased to read that FFO have declined. This is compounded by the fact revenue is actually down on last year. These factors suggest that the business performance wouldn’t really justify a high pay packet for the CEO. 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 Ventas, Inc. Been A Good Investment?
With a total shareholder return of 20% over three years, Ventas, Inc. shareholders would, in general, be reasonably content. But they would probably prefer not to see CEO compensation far in excess of the median.
In Summary…
While it’s true that shareholders have owned decent returns, it’s hard to overlook the lack of earnings growth and this makes us question whether these returns will continue. The upcoming AGM will provide shareholders the opportunity to revisit the company’s remuneration policies and evaluate if the board’s judgement and decision-making is aligned with that of the company’s shareholders.
CEO pay is simply one of the many factors that need to be considered while examining business performance. We identified 3 warning signs for Ventas (1 is a bit unpleasant!) that you should be aware of before investing here.
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.
Promoted
If you’re looking to trade Ventas, open an account with the lowest-cost* platform trusted by professionals, Interactive Brokers. Their clients from over 200 countries and territories trade stocks, options, futures, forex, bonds and funds worldwide from a single integrated account.
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.
*Interactive Brokers Rated Lowest Cost Broker by StockBrokers.com Annual Online Review 2020
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.