Simply Wall Street Declares: Digital Realty CEO Bill Stein is Overpaid

Simply Wall St.February 10, 2020

Bill Stein has been the CEO of Digital Realty Trust, Inc. (NYSE:DLR) since 2014. First, this article will compare CEO compensation with compensation at other large companies. After that, we will consider the growth in the business. And finally – as a second measure of performance – we will look at the returns shareholders have received over the last few years. This method should give us information to assess how appropriately the company pays the CEO.

See our latest analysis for Digital Realty Trust 

How Does Bill Stein’s Compensation Compare With Similar Sized Companies?

Our data indicates that Digital Realty Trust, Inc. is worth US$27b, and total annual CEO compensation was reported as US$13m for the year to December 2018. While this analysis focuses on total compensation, it’s worth noting the salary is lower, valued at US$1.1m. Importantly, there may be performance hurdles relating to the non-salary component of the total compensation. We looked at a group of companies with market capitalizations over US$8.0b and the median CEO total compensation was US$11m. There aren’t very many mega-cap companies, so we had to take a wide range to get a meaningful comparison figure.

So Bill Stein receives a similar amount to the median CEO pay, amongst the companies we looked at. Although this fact alone doesn’t tell us a great deal, it becomes more relevant when considered against the business performance.

The graphic below shows how CEO compensation at Digital Realty Trust has changed from year to year.NYSE:DLR CEO Compensation, February 10th 2020More

Is Digital Realty Trust, Inc. Growing?

Over the last three years Digital Realty Trust, Inc. has shrunk its earnings per share by an average of 25% per year (measured with a line of best fit). In the last year, its revenue is up 5.8%.

Few shareholders would be pleased to read that earnings per share are lower over three years. And the modest revenue growth over 12 months isn’t much comfort against the reduced earnings per share. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. It could be important to check this free visual depiction of what analysts expect for the future.

Has Digital Realty Trust, Inc. Been A Good Investment?

Digital Realty Trust, Inc. has generated a total shareholder return of 28% over three years, so most shareholders would be reasonably content. But they probably wouldn’t be so happy as to think the CEO should be paid more than is normal, for companies around this size.

In Summary…

Bill Stein is paid around the same as most CEOs of large companies.

The company isn’t growing earnings per share, and nor have the total returns inspired us. We do not think the CEO pay is a problem, but it’s probably fair to say that many shareholders would like to see improved performance, before any pay rise occurs. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling Digital Realty Trust (free visualization of insider trades).

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies. 

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.

https://finance.yahoo.com/news/investors-react-digital-realty-trust-141821517.html

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