Paul McDermott has been the CEO of Washington Real Estate Investment Trust (NYSE:WRE) since 2013. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. 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. The aim of all this is to consider the appropriateness of CEO pay levels.

Check out our latest analysis for Washington Real Estate Investment Trust

How Does Paul McDermott's Compensation Compare With Similar Sized Companies?

According to our data, Washington Real Estate Investment Trust has a market capitalization of US$1.6b, and paid its CEO total annual compensation worth US$3.9m over the year to December 2019. That's a notable increase of 9.2% on last year. We think total compensation is more important but we note that the CEO salary is lower, at US$650k. We note that more than half of the total compensation is not the salary; and performance requirements may apply to this non-salary portion. We looked at a group of companies with market capitalizations from US$1.0b to US$3.2b, and the median CEO total compensation was US$5.1m.

Next, let's break down remuneration compositions to understand how the industry and company compare with each other. Speaking on an industry level, we can see that nearly 15% of total compensation represents salary, while the remainder of 85% is other remuneration. Washington Real Estate Investment Trust is largely mirroring the industry average when it comes to the share a salary enjoys in overall compensation

So Paul McDermott receives a similar amount to the median CEO pay, amongst the companies we looked at. While this data point isn't particularly informative alone, it gains more meaning when considered with business performance. The graphic below shows how CEO compensation at Washington Real Estate Investment Trust has changed from year to year.

Is Washington Real Estate Investment Trust Growing?

Over the last three years Washington Real Estate Investment Trust has shrunk its earnings per share by an average of 88% per year (measured with a line of best fit). Its revenue is up 8.6% over last year.

Sadly for shareholders, earnings per share are actually down, over three years. And the modest revenue growth over 12 months isn't much comfort against the reduced earnings per share. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Shareholders might be interested in this free visualization of analyst forecasts.

Has Washington Real Estate Investment Trust Been A Good Investment?

Given the total loss of 35% over three years, many shareholders in Washington Real Estate Investment Trust are probably rather dissatisfied, to say the least. So shareholders would probably think the company shouldn't be too generous with CEO compensation.

In Summary...

Paul McDermott is paid around the same as most CEOs of similar size companies.

The company isn't growing EPS, and shareholder returns have been disappointing. This doesn't look great when you consider CEO remuneration is up on last year. Few would argue that it's wise for the company to pay any more, before returns improve. CEO compensation is an important area to keep your eyes on, but we've also identified 5 warning signs for Washington Real Estate Investment Trust (1 is potentially serious!) that you should be aware of before investing here.

If you want to buy a stock that is better than Washington Real Estate Investment Trust, this free list of high return, low debt companies is a great place to look.

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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. Thank you for reading.