This article will reflect on the compensation paid to W. Baird who has served as CEO of Terreno Realty Corporation (NYSE:TRNO) since 2010. This analysis will also look to assess whether the CEO is appropriately paid, considering recent funds from operations growth and investor returns for Terreno Realty.
Check out our latest analysis for Terreno Realty
How Does Total Compensation For W. Baird Compare With Other Companies In The Industry?
Our data indicates that Terreno Realty Corporation has a market capitalization of US$4.0b, and total annual CEO compensation was reported as US$3.2m for the year to December 2019. That’s a notable increase of 52% on last year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$800k.
In comparison with other companies in the industry with market capitalizations ranging from US$2.0b to US$6.4b, the reported median CEO total compensation was US$5.4m. This suggests that W. Baird is paid below the industry median. What’s more, W. Baird holds US$36m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.
| Component | 2019 | 2018 | Proportion (2019) |
| Salary | US$800k | US$791k | 25% |
| Other | US$2.4m | US$1.3m | 75% |
| Total Compensation | US$3.2m | US$2.1m | 100% |
On an industry level, roughly 15% of total compensation represents salary and 85% is other remuneration. It’s interesting to note that Terreno Realty pays out a greater portion of remuneration through salary, compared to the 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 Terreno Realty Corporation’s Growth Numbers
Terreno Realty Corporation has seen its funds from operations (FFO) increase by 27% per year over the past three years. In the last year, its revenue is up 12%.
Shareholders would be glad to know that the company has improved itself over the last few years. This sort of respectable year-on-year revenue growth is often seen at a healthy, growing business. 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 Terreno Realty Corporation Been A Good Investment?
We think that the total shareholder return of 76%, over three years, would leave most Terreno Realty Corporation shareholders smiling. This strong performance might mean some shareholders don’t mind if the CEO were to be paid more than is normal for a company of its size.
To Conclude…
As previously discussed, W. is compensated less than what is normal for CEOs of companies of similar size, and which belong to the same industry. When taking into account the company’s strong FFO growth over the past three years, it appears CEO compensation is modest. And given most shareholders are probably very happy with recent shareholder returns, they might even think W. deserves a raise!
CEO compensation is an important area to keep your eyes on, but we’ve also need to pay attention to other attributes of the company. We did our research and identified 3 warning signs (and 1 which makes us a bit uncomfortable) in Terreno Realty we think you should know about.
Switching gears from Terreno Realty, if you’re hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.
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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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