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Should You Worry About SL Green Realty Corp.’s (NYSE:SLG) CEO Pay Cheque?

Simply Wall St

Marc Holliday has been the CEO of SL Green Realty Corp. (NYSE:SLG) since 2004. First, this article will compare CEO compensation with compensation at similar sized companies. After that, we will consider the growth in the business. Third, we’ll reflect on the total return to shareholders over three years, as a second measure of business performance. The aim of all this is to consider the appropriateness of CEO pay levels.

See our latest analysis for SL Green Realty

How Does Marc Holliday’s Compensation Compare With Similar Sized Companies?

Our data indicates that SL Green Realty Corp. is worth US$8.0b, and total annual CEO compensation is US$17m. (This is based on the year to December 2017). We think total compensation is more important but we note that the CEO salary is lower, at US$1.4m. We examined companies with market caps from US$4.0b to US$12b, and discovered that the median CEO compensation of that group was US$6.2m.

As you can see, Marc Holliday is paid more than the median CEO pay at companies of a similar size, in the same market. However, this does not necessarily mean SL Green Realty Corp. is paying too much. We can better assess whether the pay is overly generous by looking into the underlying business performance.

The graphic below shows how CEO compensation at SL Green Realty has changed from year to year.

NYSE:SLG CEO Compensation, March 12th 2019

Is SL Green Realty Corp. Growing?

SL Green Realty Corp. has reduced its earnings per share by an average of 5.9% a year, over the last three years (measured with a line of best fit). Its revenue is down -20% over last year.

Few shareholders would be pleased to read that earnings per share are lower over three years. And the impression is worse when you consider revenue is down year-on-year. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Shareholders might be interested in this free visualization of analyst forecasts.

Has SL Green Realty Corp. Been A Good Investment?

SL Green Realty Corp. has generated a total shareholder return of 6.3% over three years, so most shareholders wouldn’t be too disappointed. 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.

In Summary…

We examined the amount SL Green Realty Corp. pays its CEO, and compared it to the amount paid by similar sized companies. Our data suggests that it pays above the median CEO pay within that group.

Neither earnings per share nor revenue have been growing sufficiently fast to impress us, over the last three years.

And while shareholder returns have been respectable, they have hardly been superb. So we think more research is needed, but we don’t think the CEO underpaid. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling SL Green Realty (free visualization of insider trades).

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.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.