Shareholders Will Probably Not Have Any Issues With Saul Centers, Inc.'s (NYSE:BFS) CEO Compensation

The performance at Saul Centers, Inc. (NYSE:BFS) has been rather lacklustre of late and shareholders may be wondering what CEO Bernard Saul is planning to do about this. At the next AGM coming up on 07 May 2021, they can influence managerial decision making through voting on resolutions, including executive remuneration. Voting on executive pay could be a powerful way to influence management, as studies have shown that the right compensation incentives impact company performance. In our opinion, CEO compensation does not look excessive and we discuss why.

View our latest analysis for Saul Centers

Comparing Saul Centers, Inc.'s CEO Compensation With the industry

According to our data, Saul Centers, Inc. has a market capitalization of US$1.0b, and paid its CEO total annual compensation worth US$194k over the year to December 2020. We note that's a decrease of 28% compared to last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$77k.

For comparison, other companies in the same industry with market capitalizations ranging between US$400m and US$1.6b had a median total CEO compensation of US$2.1m. In other words, Saul Centers pays its CEO lower than the industry median. Moreover, Bernard Saul also holds US$15m worth of Saul Centers stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component	2020	2019	Proportion (2020)
Salary	US$77k	US$125k	40%
Other	US$117k	US$144k	60%
Total Compensation	US$194k	US$269k	100%

On an industry level, around 15% of total compensation represents salary and 85% is other remuneration. Saul Centers pays out 40% of remuneration in the form of a salary, significantly higher than the industry average. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

Saul Centers, Inc.'s Growth

Saul Centers, Inc. has reduced its funds from operations (FFO) by 1.4% per year over the last three years. In the last year, its revenue is down 2.7%.

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 Saul Centers, Inc. Been A Good Investment?

Saul Centers, Inc. has generated a total shareholder return of 1.8% over three years, so most shareholders wouldn't be too disappointed. Although, there's always room to improve. As a result, investors in the company might be reluctant about agreeing to increase CEO pay in the future, before seeing an improvement on their returns.

To Conclude...

Shareholder returns while positive, need to be looked at along with earnings, which have failed to grow and this could mean that the current momentum may not continue. These are are some concerns that shareholders may want to address the board when they revisit their investment thesis.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. That's why we did our research, and identified 2 warning signs for Saul Centers (of which 1 is significant!) that you should know about in order to have a holistic understanding of the stock.

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.

If you decide to trade Saul Centers, 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. Promoted

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.