Is Equity Residential’s (NYSE:EQR) CEO Incentives Align With Yours?

In 2006 David Neithercut was appointed CEO of Equity Residential (NYSE:EQR). First, this article will compare CEO compensation with compensation at other large companies. After that, we will consider the growth in the business. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. The aim of all this is to consider the appropriateness of CEO pay levels.

See our latest analysis for Equity Residential

How Does David Neithercut’s Compensation Compare With Similar Sized Companies?

According to our data, Equity Residential has a market capitalization of US$24.8b, and pays its CEO total annual compensation worth US$9m. That’s below the compensation, last year. We took a group of companies with market capitalizations over US$8.0b, and calculated the median CEO compensation to be US$11m.

So David Neithercut is paid around the average of the companies we looked at. Although this fact alone doesn’t tell us a great deal, it becomes more relevant when considered against the business performance.

You can see, below, how CEO compensation at Equity Residential has changed over time.

NYSE:EQR CEO Compensation October 23rd 18
NYSE:EQR CEO Compensation October 23rd 18

Is Equity Residential Growing?

Equity Residential has reduced its earnings per share by an average of 30% a year, over the last three years. Its revenue is up 4.1% over last year.

Few shareholders would be pleased to read that earnings per share are lower over three years. The fairly low revenue growth fails to impress given that the earnings per share is down. It’s hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration.

Shareholders might be interested in this free visualization of analyst forecasts. .

Has Equity Residential Been A Good Investment?

Equity Residential has generated a total shareholder return of 2.8% 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…

David Neithercut is paid around what is normal the leaders of larger companies.

We’re not seeing great strides in earnings per share, and total returns were decent but not amazing in the last three years. We do not think the CEO pay is a problem, but one might argue that the company should improve returns to shareholders before increasing it. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling Equity Residential (free visualization of insider trades).

Of course, the past can be informative so you might be interested in considering this analytical visualization showing the company history of earnings and revenue.

To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.