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Jim Connor became the CEO of Duke Realty Corporation (NYSE:DRE) in 2016, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. This analysis will also assess whether Duke Realty pays its CEO appropriately, considering its funds from operations growth and total shareholder returns.
Comparing Duke Realty Corporation's CEO Compensation With the industry
Our data indicates that Duke Realty Corporation has a market capitalization of US$14b, and total annual CEO compensation was reported as US$6.7m for the year to December 2019. That's mostly flat as compared to the prior year's compensation. We think total compensation is more important but our data shows that the CEO salary is lower, at US$878k.
On comparing similar companies in the industry with market capitalizations above US$8.0b, we found that the median total CEO compensation was US$7.7m. This suggests that Duke Realty remunerates its CEO largely in line with the industry average. Moreover, Jim Connor also holds US$7.2m worth of Duke Realty stock directly under their own name, which reveals to us that they have a significant personal stake in the company.
On an industry level, around 15% of total compensation represents salary and 85% is other remuneration. Duke Realty sets aside a smaller share of compensation for salary, in comparison to the overall industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.
A Look at Duke Realty Corporation's Growth Numbers
Duke Realty Corporation has seen its funds from operations (FFO) increase by 2.0% per year over the past three years. In the last year, its revenue is down 6.4%.
We generally like to see a little revenue growth, but the modest FFOgrowth gives us some relief. These two metrics are moving in different directions, so while it's hard to be confident judging performance, we think the stock is worth watching. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..
Has Duke Realty Corporation Been A Good Investment?
Most shareholders would probably be pleased with Duke Realty Corporation for providing a total return of 47% over three years. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.
As we touched on above, Duke Realty Corporation is currently paying a compensation that's close to the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. However, the company's FFO growth numbers over the last three years is not that impressive. On the other hand, shareholder returns over the same period have been very healthy. So while shareholders shouldn't be overly concerned about CEO compensation, we suspect most would prefer to see improved performance, before a bump in pay.
CEO pay is simply one of the many factors that need to be considered while examining business performance. In our study, we found 4 warning signs for Duke Realty you should be aware of, and 1 of them is significant.
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.
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.
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