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?
At the time of writing, our data shows that Innovative Industrial Properties, Inc. has a market capitalization of US$4.3b, and reported total annual CEO compensation of US$1.9m for the year to December 2020. Notably, that’s an increase of 32% over the year before. While we always look at total compensation first, our analysis shows that the salary component is less, at US$420k.
On comparing similar companies from the same industry with market caps ranging from US$2.0b to US$6.4b, we found that the median CEO total compensation was US$5.3m. That is to say, Paul Smithers is paid under the industry median. What’s more, Paul Smithers holds US$5.7m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.
| 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, 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.
NYSE:IIPR CEO Compensation May 29th 2021
A Look at Innovative Industrial Properties, Inc.’s Growth Numbers
Innovative Industrial Properties, Inc. has seen its funds from operations (FFO) increase by 279% per year over the past three years. In the last year, its revenue is up 135%.
Shareholders would be glad to know that the company has improved itself over the last few years. The combination of strong revenue growth with medium-term FFO improvement certainly points to the kind of growth we like to see. 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?
Most shareholders would probably be pleased with Innovative Industrial Properties, Inc. for providing a total return of 427% over three years. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.
In Summary…
Seeing that the company has put in a relatively good performance, the CEO remuneration policy may not be the focus at the AGM. In fact, strategic decisions that could impact the future of the business might be a far more interesting topic for investors as it would help them set their longer-term expectations.
While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. We’ve identified 3 warning signs for Innovative Industrial Properties that investors should be aware of in a dynamic business environment.
Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies that have HIGH return on equity and low debt.
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