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What Can We Make Of UDR's (NYSE:UDR) CEO Compensation?

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Simply Wall St
·4 min read
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Tom Toomey has been the CEO of UDR, Inc. (NYSE:UDR) since 2001, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the funds from operations and shareholder returns of the company.

View our latest analysis for UDR

How Does Total Compensation For Tom Toomey Compare With Other Companies In The Industry?

According to our data, UDR, Inc. has a market capitalization of US$12b, and paid its CEO total annual compensation worth US$6.3m over the year to December 2019. That is, the compensation was roughly the same as last year. While we always look at total compensation first, our analysis shows that the salary component is less, at US$800k.

On comparing similar companies in the industry with market capitalizations above US$8.0b, we found that the median total CEO compensation was US$7.1m. From this we gather that Tom Toomey is paid around the median for CEOs in the industry. Moreover, Tom Toomey also holds US$57m worth of UDR 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$800k

US$800k

13%

Other

US$5.5m

US$5.5m

87%

Total Compensation

US$6.3m

US$6.3m

100%

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. UDR sets aside a smaller share of compensation for salary, in comparison to the overall industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

ceo-compensation
ceo-compensation

UDR, Inc.'s Growth

Over the past three years, UDR, Inc. has seen its funds from operations (FFO) grow by 4.1% per year. In the last year, its revenue is up 15%.

This revenue growth could really point to a brighter future. And the improvement in FFOis modest but respectable. So while performance isn't amazing, we think it really does seem quite respectable. 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 UDR, Inc. Been A Good Investment?

UDR, Inc. has not done too badly by shareholders, with a total return of 9.2%, over three years. But they probably wouldn't be so happy as to think the CEO should be paid more than is normal, for companies around this size.

To Conclude...

As we touched on above, UDR, Inc. is currently paying a compensation that's close to the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. However, FFO and total shareholder return are solid yet uninspiring. Considering the steady performance, it's tough to call out CEO compensation as too high, but shareholders might want to see more robust growth metrics before agreeing to a future raise.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. We identified 5 warning signs for UDR (2 can't be ignored!) that you should be aware of before investing here.

Important note: UDR 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com.