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Is Kilroy Realty Corporation’s (NYSE:KRC) CEO Pay Justified?

Ajay Mannan

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John Kilroy became the CEO of Kilroy Realty Corporation (NYSE:KRC) in 1996. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. 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. The aim of all this is to consider the appropriateness of CEO pay levels.

View our latest analysis for Kilroy Realty

How Does John Kilroy’s Compensation Compare With Similar Sized Companies?

According to our data, Kilroy Realty Corporation has a market capitalization of US$7.2b, and pays its CEO total annual compensation worth US$11m. (This number is for the twelve months until 2017). We think total compensation is more important but we note that the CEO salary is lower, at US$1.2m. As part of our analysis we looked at companies in the same jurisdiction, with market capitalizations of US$4.0b to US$12b. The median total CEO compensation was US$6.3m.

Thus we can conclude that John Kilroy receives more in total compensation than the median of a group of companies in the same market, and of similar size to Kilroy Realty Corporation. However, this doesn’t necessarily mean the pay is too high. A closer look at the performance of the underlying business will give us a better idea about whether the pay is particularly generous.

You can see a visual representation of the CEO compensation at Kilroy Realty, below.

NYSE:KRC CEO Compensation February 1st 19

Is Kilroy Realty Corporation Growing?

Kilroy Realty Corporation has reduced its earnings per share by an average of 31% a year, over the last three years. It achieved revenue growth of 4.1% over the last year.

Unfortunately, earnings per share have trended lower over the last three years. And the modest revenue growth over 12 months isn’t much comfort against the reduced earnings per share. These factors suggest that the business performance wouldn’t really justify a high pay packet for the CEO.

You might want to check this free visual report on analyst forecasts for future earnings.

Has Kilroy Realty Corporation Been A Good Investment?

I think that the total shareholder return of 47%, over three years, would leave most Kilroy Realty Corporation shareholders smiling. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.

In Summary…

We compared total CEO remuneration at Kilroy Realty Corporation 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.

We think many shareholders would be underwhelmed with the business growth over the last three years.

But clearly there are some positives, because investors have done well over the same time frame. So on this analysis we’d stop short of criticizing the level of CEO compensation. Shareholders may want to check for free if Kilroy Realty insiders are buying or selling shares.

Of course, the past can be informative so you might be interested in considering this analytical visualization showing the company history of earnings and revenue.

To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.