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Share price growth at Boston Properties, Inc. (NYSE:BXP) has remained rather flat over the last few years and it may be because earnings has struggled to grow at all. These concerns will be at the front of shareholders' minds as they go into the AGM coming up on 20 May 2021. One way that shareholders can influence managerial decisions is through voting on CEO and executive remuneration packages, which studies show could impact company performance. In our analysis below, we show why shareholders may consider holding off a raise for the CEO's compensation until company performance improves.
Comparing Boston Properties, Inc.'s CEO Compensation With the industry
According to our data, Boston Properties, Inc. has a market capitalization of US$18b, and paid its CEO total annual compensation worth US$11m over the year to December 2020. That's a notable decrease of 9.9% on last year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$900k.
On comparing similar companies in the industry with market capitalizations above US$8.0b, we found that the median total CEO compensation was US$7.8m. This suggests that Owen Thomas is paid more than the median for the industry. Furthermore, Owen Thomas directly owns US$990k worth of shares in the company.
Speaking on an industry level, nearly 15% of total compensation represents salary, while the remainder of 85% is other remuneration. In Boston Properties' case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader 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 Boston Properties, Inc.'s Growth Numbers
Boston Properties, Inc.'s funds from operations stayed pretty flat over the last three years. In the last year, its revenue is down 10%.
The lack of FFO growth is certainly uninspiring. 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. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..
Has Boston Properties, Inc. Been A Good Investment?
With a total shareholder return of 0.5% over three years, Boston Properties, Inc. has done okay by shareholders, but there's always room for improvement. In light of that, investors might probably want to see an improvement on their returns before they feel generous about increasing the CEO remuneration.
While it's true that the share price growth hasn't been bad, it's hard to overlook the lack of earnings growth and this makes us question whether there will be any strong catalyst for the stock to improve. In the upcoming AGM, shareholders will get the opportunity to discuss any concerns with the board, including those related to CEO remuneration and assess if the board's plan will likely improve performance in the future.
CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. We did our research and identified 3 warning signs (and 1 which shouldn't be ignored) in Boston Properties we think you should know about.
Important note: Boston Properties 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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