Bill Bayless became the CEO of American Campus Communities, Inc. (NYSE:ACC) in 2003, 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.
Comparing American Campus Communities, Inc.'s CEO Compensation With the industry
At the time of writing, our data shows that American Campus Communities, Inc. has a market capitalization of US$5.3b, and reported total annual CEO compensation of US$5.8m for the year to December 2019. We note that's an increase of 24% above last year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$800k.
For comparison, other companies in the same industry with market capitalizations ranging between US$4.0b and US$12b had a median total CEO compensation of US$6.3m. This suggests that American Campus Communities remunerates its CEO largely in line with the industry average. What's more, Bill Bayless holds US$12m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.
Speaking on an industry level, nearly 15% of total compensation represents salary, while the remainder of 85% is other remuneration. Our data reveals that American Campus Communities allocates salary more or less in line with the wider market. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.
A Look at American Campus Communities, Inc.'s Growth Numbers
American Campus Communities, Inc. has reduced its funds from operations (FFO) by 1.2% per year over the last three years. It saw its revenue drop 4.3% over the last year.
Its a bit disappointing to see that the company has failed to grow its FFO. And the impression is worse when you consider revenue is down year-on-year. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. 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 American Campus Communities, Inc. Been A Good Investment?
American Campus Communities, Inc. has generated a total shareholder return of 5.1% over three years, so most shareholders wouldn't be too disappointed. But they would probably prefer not to see CEO compensation far in excess of the median.
As we touched on above, American Campus Communities, Inc. 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. American Campus Communities has had a tough time in recent years, with declining FFO growth, and although shareholder returns are stable, they are hardly worth celebrating. This doesn't compare well with CEO compensation, which is close to the industry median. Considering all of this, we can't say the CEO is underpaid, and moving forward shareholders will likely want to see higher growth to justify any raise.
CEO pay is simply one of the many factors that need to be considered while examining business performance. In our study, we found 5 warning signs for American Campus Communities you should be aware of, and 2 of them are potentially serious.
Switching gears from American Campus Communities, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.
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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