This article will reflect on the compensation paid to Jordan Kaplan who has served as CEO of Douglas Emmett, Inc. (NYSE:DEI) since 2005. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.
How Does Total Compensation For Jordan Kaplan Compare With Other Companies In The Industry?
According to our data, Douglas Emmett, Inc. has a market capitalization of US$5.9b, and paid its CEO total annual compensation worth US$9.4m over the year to December 2019. That's a modest increase of 8.0% on the prior year. While we always look at total compensation first, our analysis shows that the salary component is less, at US$1.0m.
On comparing similar companies from the same industry with market caps ranging from US$4.0b to US$12b, we found that the median CEO total compensation was US$6.0m. Accordingly, our analysis reveals that Douglas Emmett, Inc. pays Jordan Kaplan north of the industry median. Furthermore, Jordan Kaplan directly owns US$79m worth of shares in the company, implying that they are deeply invested in the company's success.
Talking in terms of the industry, salary represented approximately 15% of total compensation out of all the companies we analyzed, while other remuneration made up 85% of the pie. In Douglas Emmett's case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.
A Look at Douglas Emmett, Inc.'s Growth Numbers
Over the past three years, Douglas Emmett, Inc. has seen its earnings per share (EPS) grow by 47% per year. It achieved revenue growth of 3.6% over the last year.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's nice to see revenue heading northwards, as this is consistent with healthy business conditions. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..
Has Douglas Emmett, Inc. Been A Good Investment?
Given the total shareholder loss of 16% over three years, many shareholders in Douglas Emmett, Inc. are probably rather dissatisfied, to say the least. So shareholders would probably want the company to be lessto generous with CEO compensation.
As we noted earlier, Douglas Emmett pays its CEO higher than the norm for similar-sized companies belonging to the same industry. However, the earnings per share growth is certainly impressive, but it's disappointing to see negative shareholder returns over the same period. Considering overall performance, we can't say Jordan is underpaid, in fact compensation is definitely on the higher side.
CEO pay is simply one of the many factors that need to be considered while examining business performance. We identified 4 warning signs for Douglas Emmett (2 shouldn't be ignored!) that you should be aware of before investing here.
Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.
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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