How Much Is Apartment Investment and Management's (NYSE:AIV) CEO Getting Paid?
Terry Considine has been the CEO of Apartment Investment and Management Company (NYSE:AIV) since 1994, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also look to assess whether the CEO is appropriately paid, considering recent funds from operations growth and investor returns for Apartment Investment and Management.
View our latest analysis for Apartment Investment and Management
How Does Total Compensation For Terry Considine Compare With Other Companies In The Industry?
At the time of writing, our data shows that Apartment Investment and Management Company has a market capitalization of US$4.2b, and reported total annual CEO compensation of US$7.3m for the year to December 2019. That's a modest increase of 7.9% on the prior year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$700k.
On comparing similar companies from the same industry with market caps ranging from US$2.0b to US$6.4b, we found that the median CEO total compensation was US$5.7m. From this we gather that Terry Considine is paid around the median for CEOs in the industry. Moreover, Terry Considine also holds US$9.9m worth of Apartment Investment and Management stock directly under their own name, which reveals to us that they have a significant personal stake in the company.
Component | 2019 | 2018 | Proportion (2019) |
Salary | US$700k | US$700k | 10% |
Other | US$6.6m | US$6.1m | 90% |
Total Compensation | US$7.3m | US$6.8m | 100% |
Speaking on an industry level, nearly 15% of total compensation represents salary, while the remainder of 85% is other remuneration. In Apartment Investment and Management's case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.
Apartment Investment and Management Company's Growth
Over the last three years, Apartment Investment and Management Company has shrunk its funds from operations (FFO) by 3.8% per year. It saw its revenue drop 3.0% over the last year.
The decline in FFO is a bit concerning. This is compounded by the fact revenue is actually down on last year. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.
Has Apartment Investment and Management Company Been A Good Investment?
Since shareholders would have lost about 14% over three years, some Apartment Investment and Management Company investors would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.
In Summary...
As previously discussed, Terry is compensated close to the median for companies of its size, and which belong to the same industry. In the meantime, the company has reported declining FFO growth and shareholder returns over the last three years. We'd stop short of saying compensation is inappropriate, but we would understand if shareholders had questions regarding a future raise.
We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. That's why we did our research, and identified 4 warning signs for Apartment Investment and Management (of which 1 doesn't sit too well with us!) that you should know about in order to have a holistic understanding of the stock.
Important note: Apartment Investment and Management is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.
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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