David Singelyn became the CEO of American Homes 4 Rent (NYSE:AMH) in 2012. First, this article will compare CEO compensation with compensation at similar sized companies. Then we'll look at a snap shot of the business growth. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This method should give us information to assess how appropriately the company pays the CEO.
How Does David Singelyn's Compensation Compare With Similar Sized Companies?
At the time of writing, our data says that American Homes 4 Rent has a market cap of US$9.2b, and reported total annual CEO compensation of US$473k for the year to December 2018. It is worth noting that the CEO compensation consists almost entirely of the salary, worth US$450k. We examined companies with market caps from US$4.0b to US$12b, and discovered that the median CEO total compensation of that group was US$6.6m.
A first glance this seems like a real positive for shareholders, since David Singelyn is paid less than the average total compensation paid by similar sized companies. However, before we heap on the praise, we should delve deeper to understand business performance.
The graphic below shows how CEO compensation at American Homes 4 Rent has changed from year to year.
Is American Homes 4 Rent Growing?
On average over the last three years, American Homes 4 Rent has grown earnings per share (EPS) by 112% each year (using a line of best fit). Its revenue is up 8.1% over last year.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's nice to see a little revenue growth, as this is consistent with healthy business conditions. It could be important to check this free visual depiction of what analysts expect for the future.
Has American Homes 4 Rent Been A Good Investment?
American Homes 4 Rent has served shareholders reasonably well, with a total return of 26% over three years. But they probably don't want to see the CEO paid more than is normal for companies around the same size.
It appears that American Homes 4 Rent remunerates its CEO below most similar sized companies.
Since the business is growing, many would argue this suggests the pay is modest. The total shareholder return might not be amazing, but that doesn't mean that David Singelyn is paid too much. Few would complain about reasonable CEO remuneration when the business is growing earnings per share. But for me, it's even better if insiders are also buying shares with their own cold, hard, cash. If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at American Homes 4 Rent.
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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