In 2012 Hamid Moghadam was appointed CEO of Prologis, Inc. (NYSE:PLD). This analysis aims first to contrast CEO compensation with other large companies. Then we'll look at a snap shot of the business growth. 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.
How Does Hamid Moghadam's Compensation Compare With Similar Sized Companies?
Our data indicates that Prologis, Inc. is worth US$57b, and total annual CEO compensation was reported as US$28m for the year to December 2018. While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at US$1.0m. We note that more than half of the total compensation is not the salary; and performance requirements may apply to this non-salary portion. We took a group of companies with market capitalizations over US$8.0b, and calculated the median CEO total compensation to be US$11m. (We took a wide range because the CEOs of massive companies tend to be paid similar amounts - even though some are quite a bit bigger than others).
It would therefore appear that Prologis, Inc. pays Hamid Moghadam more than the median CEO remuneration at large companies, in the same market. However, this fact alone doesn't mean the remuneration 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, below, how CEO compensation at Prologis has changed over time.
Is Prologis, Inc. Growing?
Over the last three years Prologis, Inc. has grown its earnings per share (EPS) by an average of 9.2% per year (using a line of best fit). Its revenue is up 24% over last year.
I would argue that the modest growth in revenue is a notable positive. And the improvement in earnings per share is modest but respectable. So while performance isn't amazing, we think it really does seem quite respectable. Shareholders might be interested in this free visualization of analyst forecasts.
Has Prologis, Inc. Been A Good Investment?
Most shareholders would probably be pleased with Prologis, Inc. for providing a total return of 97% over three years. 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.
We examined the amount Prologis, Inc. pays its CEO, and compared it to the amount paid by other large companies. We found that it pays well over the median amount paid in the benchmark group.
While we generally prefer to see stronger EPS growth, there's no arguing with the strong returns to shareholders, over the last three years. Considering this fine result for investors, we daresay the CEO compensation might be apt. If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at Prologis.
Important note: Prologis may not be the best stock to buy. You might find something better in this list of interesting companies with high ROE and low debt.
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