Ken Bernstein became the CEO of Acadia Realty Trust (NYSE:AKR) in 2001, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. This analysis will also assess whether Acadia Realty Trust pays its CEO appropriately, considering its funds from operations growth and total shareholder returns.
Comparing Acadia Realty Trust's CEO Compensation With the industry
At the time of writing, our data shows that Acadia Realty Trust has a market capitalization of US$1.3b, and reported total annual CEO compensation of US$5.7m for the year to December 2019. We note that's an increase of 12% above last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$700k.
On examining similar-sized companies in the industry with market capitalizations between US$1.0b and US$3.2b, we discovered that the median CEO total compensation of that group was US$4.6m. From this we gather that Ken Bernstein is paid around the median for CEOs in the industry. Moreover, Ken Bernstein also holds US$5.0m worth of Acadia Realty Trust stock directly under their own name, which reveals to us that they have a significant personal stake in the company.
On an industry level, roughly 15% of total compensation represents salary and 85% is other remuneration. In Acadia Realty Trust's case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.
A Look at Acadia Realty Trust's Growth Numbers
Acadia Realty Trust has reduced its funds from operations (FFO) by 4.6% per year over the last three years. In the last year, its revenue is down 10%.
Overall this is not a very positive result for shareholders. And the impression is worse when you consider revenue is down year-on-year. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..
Has Acadia Realty Trust Been A Good Investment?
Since shareholders would have lost about 43% over three years, some Acadia Realty Trust investors would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.
As we touched on above, Acadia Realty Trust 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. Meanwhile, FFO growth and shareholder returns have been in the red for the last three years. Considering overall performance, shareholders will likely hold off support for a raise until results improve.
It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. In our study, we found 5 warning signs for Acadia Realty Trust you should be aware of, and 2 of them are significant.
Important note: Acadia Realty Trust 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.
If you decide to trade Acadia Realty Trust, use the lowest-cost* platform that is rated #1 Overall by Barron’s, Interactive Brokers. Trade stocks, options, futures, forex, bonds and funds on 135 markets, all from a single integrated account.
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.
*Interactive Brokers Rated Lowest Cost Broker by StockBrokers.com Annual Online Review 2020
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.