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Mike Schall became the CEO of Essex Property Trust, Inc. (NYSE:ESS) in 2011, 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 evaluate the appropriateness of CEO compensation when taking into account the funds from operations and shareholder returns of the company.
How Does Total Compensation For Mike Schall Compare With Other Companies In The Industry?
At the time of writing, our data shows that Essex Property Trust, Inc. has a market capitalization of US$17b, and reported total annual CEO compensation of US$6.4m for the year to December 2019. We note that's an increase of 18% above last year. While we always look at total compensation first, our analysis shows that the salary component is less, at US$800k.
On comparing similar companies in the industry with market capitalizations above US$8.0b, we found that the median total CEO compensation was US$7.1m. So it looks like Essex Property Trust compensates Mike Schall in line with the median for the industry. Moreover, Mike Schall also holds US$12m worth of Essex Property Trust stock directly under their own name, which reveals to us that they have a significant personal stake in the company.
On an industry level, roughly 15% of total compensation represents salary and 85% is other remuneration. It's interesting to note that Essex Property Trust allocates a smaller portion of compensation to salary in comparison to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.
A Look at Essex Property Trust, Inc.'s Growth Numbers
Essex Property Trust, Inc. has seen its funds from operations (FFO) increase by 3.6% per year over the past three years. It achieved revenue growth of 7.4% over the last year.
We're not particularly impressed by the revenue growth, but it is good to see modest FFO growth. It's clear the performance has been quite decent, but it it falls short of outstanding,based on this information. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.
Has Essex Property Trust, Inc. Been A Good Investment?
With a total shareholder return of 15% over three years, Essex Property Trust, Inc. shareholders would, in general, be reasonably content. But they probably don't want to see the CEO paid more than is normal for companies around the same size.
As previously discussed, Mike is compensated close to the median for companies of its size, and which belong to the same industry. However, FFO and total shareholder return are solid yet uninspiring. Considering the steady performance, it's tough to call out CEO compensation as too high, but shareholders might want to see more robust growth metrics before agreeing to a future raise.
CEO pay is simply one of the many factors that need to be considered while examining business performance. We identified 4 warning signs for Essex Property Trust (2 are significant!) that you should be aware of before investing here.
Important note: Essex Property Trust is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE 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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