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How Should Investors React To The Howard Hughes Corporation's (NYSE:HHC) CEO Pay?

Simply Wall St

David Weinreb has been the CEO of The Howard Hughes Corporation (NYSE:HHC) since 2010. First, this article will compare CEO compensation with compensation at similar sized companies. Next, we'll consider growth that the business demonstrates. And finally - as a second measure of performance - we will look at the returns shareholders have received over the last few years. This process should give us an idea about how appropriately the CEO is paid.

See our latest analysis for Howard Hughes

How Does David Weinreb's Compensation Compare With Similar Sized Companies?

At the time of writing our data says that The Howard Hughes Corporation has a market cap of US$5.6b, and is paying total annual CEO compensation of US$7.3m. (This number is for the twelve months until December 2018). While we always look at total compensation first, we note that the salary component is less, at US$1.0m. We examined companies with market caps from US$4.0b to US$12b, and discovered that the median CEO total compensation of that group was US$6.9m.

That means David Weinreb receives fairly typical remuneration for the CEO of a company that size. While this data point isn't particularly informative alone, it gains more meaning when considered with business performance.

The graphic below shows how CEO compensation at Howard Hughes has changed from year to year.

NYSE:HHC CEO Compensation, July 22nd 2019

Is The Howard Hughes Corporation Growing?

Over the last three years The Howard Hughes Corporation has shrunk its earnings per share by an average of 45% per year (measured with a line of best fit). It achieved revenue growth of 22% over the last year.

Unfortunately, earnings per share have trended lower over the last three years. And while it's good to see some good revenue growth recently, the growth isn't really fast enough for me to put aside my concerns around earnings. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Shareholders might be interested in this free visualization of analyst forecasts.

Has The Howard Hughes Corporation Been A Good Investment?

The Howard Hughes Corporation has served shareholders reasonably well, with a total return of 12% over three years. But they probably wouldn't be so happy as to think the CEO should be paid more than is normal, for companies around this size.

In Summary...

David Weinreb is paid around what is normal the leaders of comparable size companies.

We feel that earnings per share have been a bit disappointing, but and we don't think the total returns are amazing. We're not saying the CEO pay is too generous, but one might argue that the company should improve returns to shareholders before increasing it. So you may want to check if insiders are buying Howard Hughes shares with their own money (free access).

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.

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 editorial-team@simplywallst.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.