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Tim Naughton has been the CEO of AvalonBay Communities, Inc. (NYSE:AVB) since 2012. This analysis aims first to contrast CEO compensation with other large companies. After that, we will consider the growth in the business. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This method should give us information to assess how appropriately the company pays the CEO.
How Does Tim Naughton's Compensation Compare With Similar Sized Companies?
Our data indicates that AvalonBay Communities, Inc. is worth US$28b, and total annual CEO compensation is US$10m. (This figure is for the year to December 2018). We note that's an increase of 28% above last year. While we always look at total compensation first, we note that the salary component is less, at US$1.0m. We looked at a group of companies with market capitalizations over US$8.0b and the median CEO total compensation was US$11m. (We took a wide range because the CEOs of massive companies tend to be paid similar amounts - even though some are quite a bit bigger than others).
So Tim Naughton receives a similar amount to the median CEO pay, amongst the companies we looked at. Although this fact alone doesn't tell us a great deal, it becomes more relevant when considered against the business performance.
You can see a visual representation of the CEO compensation at AvalonBay Communities, below.
Is AvalonBay Communities, Inc. Growing?
Over the last three years AvalonBay Communities, Inc. has grown its earnings per share (EPS) by an average of 1.7% per year (using a line of best fit). In the last year, its revenue is up 4.6%.
I'm not particularly impressed by the revenue growth, but I'm happy with the modest EPS growth. So there are some positives here, but not enough to earn high praise. Shareholders might be interested in this free visualization of analyst forecasts.
Has AvalonBay Communities, Inc. Been A Good Investment?
AvalonBay Communities, Inc. has generated a total shareholder return of 18% over three years, so most shareholders would be reasonably content. But they probably don't want to see the CEO paid more than is normal for companies around the same size.
Tim Naughton is paid around the same as most CEOs of large companies.
The company isn't showing particularly great growth, and shareholder turns haven't been particularly inspiring in the last few years. While the CEO may not be underpaid, we don't think the pay is too generous either. Whatever your view on compensation, you might want to check if insiders are buying or selling AvalonBay Communities shares (free trial).
Important note: AvalonBay Communities may not be the best stock to buy. You might find something better in this list of interesting companies with high ROE and low debt.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at email@example.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. Thank you for reading.