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How Should Investors React To Tejon Ranch Co.'s (NYSE:TRC) CEO Pay?

Simply Wall St

In 2013 Greg Bielli was appointed CEO of Tejon Ranch Co. (NYSE:TRC). First, this article will compare CEO compensation with compensation at similar sized companies. Then we'll look at a snap shot of the business growth. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. This method should give us information to assess how appropriately the company pays the CEO.

Check out our latest analysis for Tejon Ranch

How Does Greg Bielli's Compensation Compare With Similar Sized Companies?

At the time of writing, our data says that Tejon Ranch Co. has a market cap of US$428m, and reported total annual CEO compensation of US$2.3m for the year to December 2018. We think total compensation is more important but we note that the CEO salary is lower, at US$625k. We further remind readers that the CEO may face performance requirements to receive the non-salary part of the total compensation. As part of our analysis we looked at companies in the same jurisdiction, with market capitalizations of US$200m to US$800m. The median total CEO compensation was US$1.7m.

As you can see, Greg Bielli is paid more than the median CEO pay at companies of a similar size, in the same market. However, this does not necessarily mean Tejon Ranch Co. is paying too much. We can better assess whether the pay is overly generous by looking into the underlying business performance.

The graphic below shows how CEO compensation at Tejon Ranch has changed from year to year.

NYSE:TRC CEO Compensation, December 16th 2019

Is Tejon Ranch Co. Growing?

Tejon Ranch Co. has increased its earnings per share (EPS) by an average of 56% a year, over the last three years (using a line of best fit). It saw its revenue drop 10% over the last year.

This demonstrates that the company has been improving recently. A good result. Revenue growth is a real positive for growth, but ultimately profits are more important. We don't have analyst forecasts, but you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.

Has Tejon Ranch Co. Been A Good Investment?

With a three year total loss of 40%, Tejon Ranch Co. would certainly have some dissatisfied shareholders. So shareholders would probably think the company shouldn't be too generous with CEO compensation.

In Summary...

We compared total CEO remuneration at Tejon Ranch Co. with the amount paid at companies with a similar market capitalization. We found that it pays well over the median amount paid in the benchmark group.

Importantly, though, the company has impressed with its earnings per share growth, over three years. On the other hand returns to investors over the same period have probably disappointed many. One might thus conclude that it would be better if the company waited until growth is reflected in the share price, before increasing CEO compensation. So you may want to check if insiders are buying Tejon Ranch shares with their own money (free access).

If you want to buy a stock that is better than Tejon Ranch, this free list of high return, low debt companies is a great place to look.

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.

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. Thank you for reading.