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Douglas Emmett, Inc. (NYSE:DEI) has not performed well recently and CEO Jordan Kaplan will probably need to up their game. Shareholders will be interested in what the board will have to say about turning performance around at the next AGM on 27 May 2021. They will also get a chance to influence managerial decision-making through voting on resolutions such as executive remuneration, which may impact firm value in the future. The data we present below explains why we think CEO compensation is not consistent with recent performance.
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$7.0b, and paid its CEO total annual compensation worth US$8.5m over the year to December 2020. That's a notable decrease of 10% on last year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$867k.
In comparison with other companies in the industry with market capitalizations ranging from US$4.0b to US$12b, the reported median CEO total compensation was US$6.4m. Accordingly, our analysis reveals that Douglas Emmett, Inc. pays Jordan Kaplan north of the industry median. Furthermore, Jordan Kaplan directly owns US$95m worth of shares in the company, implying that they are deeply invested in the company's success.
On an industry level, roughly 15% of total compensation represents salary and 85% is other remuneration. Douglas Emmett pays a modest slice of remuneration through salary, as compared 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.
A Look at Douglas Emmett, Inc.'s Growth Numbers
Douglas Emmett, Inc. has reduced its funds from operations (FFO) by 1.5% per year over the last three years. It saw its revenue drop 12% over the last year.
Its a bit disappointing to see that the company has failed to grow its FFO. And the fact that revenue is down year on year arguably paints an ugly picture. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.
Has Douglas Emmett, Inc. Been A Good Investment?
Given the total shareholder loss of 0.08% 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 less generous with CEO compensation.
Along with the business performing poorly, shareholders have suffered with poor share price returns on their investments, suggesting that there's little to no chance of them being in favor of a CEO pay raise. At the upcoming AGM, management will get a chance to explain how they plan to get the business back on track and address the concerns from investors.
CEO pay is simply one of the many factors that need to be considered while examining business performance. We did our research and identified 3 warning signs (and 1 which is a bit concerning) in Douglas Emmett we think you should know about.
Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies that have HIGH return on equity 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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