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Does EastGroup Properties, Inc.'s (NYSE:EGP) CEO Salary Reflect Performance?

Simply Wall St

In 2016 Marshall Loeb was appointed CEO of EastGroup Properties, Inc. (NYSE:EGP). First, this article will compare CEO compensation with compensation at similar sized companies. Next, we'll consider growth that the business demonstrates. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. The aim of all this is to consider the appropriateness of CEO pay levels.

View our latest analysis for EastGroup Properties

How Does Marshall Loeb's Compensation Compare With Similar Sized Companies?

Our data indicates that EastGroup Properties, Inc. is worth US$5.1b, and total annual CEO compensation was reported as US$4.4m for the year to December 2018. We think total compensation is more important but we note that the CEO salary is lower, at US$650k. We further remind readers that the CEO may face performance requirements to receive the non-salary part of the total compensation. We looked at a group of companies with market capitalizations from US$4.0b to US$12b, and the median CEO total compensation was US$6.7m.

This would give shareholders a good impression of the company, since most similar size companies have to pay more, leaving less for shareholders. However, before we heap on the praise, we should delve deeper to understand business performance.

You can see a visual representation of the CEO compensation at EastGroup Properties, below.

NYSE:EGP CEO Compensation, December 31st 2019

Is EastGroup Properties, Inc. Growing?

On average over the last three years, EastGroup Properties, Inc. has shrunk earnings per share by 4.6% each year (measured with a line of best fit). It achieved revenue growth of 11% over the last year.

Sadly for shareholders, earnings per share are actually down, over three years. There's no doubt that the silver lining is that revenue is up. But it isn't sufficiently fast growth to overlook the fact that earnings per share has gone backwards over three years. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Shareholders might be interested in this free visualization of analyst forecasts.

Has EastGroup Properties, Inc. Been A Good Investment?

Boasting a total shareholder return of 95% over three years, EastGroup Properties, Inc. has done well by shareholders. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

In Summary...

It looks like EastGroup Properties, Inc. pays its CEO less than similar sized companies.

It's well worth noting that while Marshall Loeb is paid less than most company leaders (at similar sized companies), there isn't much EPS growth. Having said that, returns to shareholders have been great. Although we could see higher EPS growth, we'd argue the remuneration is not an issue, based on these observations. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling EastGroup Properties (free visualization of insider trades).

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.

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.

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