This article will reflect on the compensation paid to Mike Schall who has served as CEO of Essex Property Trust, Inc. (NYSE:ESS) since 2011. This analysis will also assess whether Essex Property Trust pays its CEO appropriately, considering its funds from operations growth and total shareholder returns.
View our latest analysis for Essex Property Trust
How Does Total Compensation For Mike Schall Compare With Other Companies In The Industry?
At the time of writing, our data shows that Essex Property Trust, Inc. has a market capitalization of US$15b, and reported total annual CEO compensation of US$6.4m for the year to December 2019. We note that's an increase of 18% above last year. While we always look at total compensation first, our analysis shows that the salary component is less, at US$800k.
On comparing similar companies in the industry with market capitalizations above US$8.0b, we found that the median total CEO compensation was US$7.7m. From this we gather that Mike Schall is paid around the median for CEOs in the industry. Furthermore, Mike Schall directly owns US$9.8m worth of shares in the company, implying that they are deeply invested in the company's success.
| Component | 2019 | 2018 | Proportion (2019) |
| Salary | US$800k | US$800k | 12% |
| Other | US$5.6m | US$4.6m | 88% |
| Total Compensation | US$6.4m | US$5.4m | 100% |
Speaking on an industry level, nearly 15% of total compensation represents salary, while the remainder of 85% is other remuneration. It's interesting to note that Essex Property Trust allocates a smaller portion of compensation to salary in comparison to the broader industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.
Essex Property Trust, Inc.'s Growth
Essex Property Trust, Inc.'s funds from operations (FFO) grew 5.8% per yearover the last three years. In the last year, its revenue is up 9.2%.
We would argue that the improvement in revenue is good, but isn't particularly impressive, but the modest improvement in FFO is good. So there are some positives here, but not enough to earn high praise. 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 Essex Property Trust, Inc. Been A Good Investment?
With a three year total loss of 9.8% for the shareholders, Essex Property Trust, Inc. would certainly have some dissatisfied shareholders. So shareholders would probably want the company to be lessto generous with CEO compensation.
In Summary...
As previously discussed, Mike is compensated close to the median for companies of its size, and which belong to the same industry. Meanwhile, Essex Property Trust is suffering from adverse shareholder returns and althoughFFO have grown over the past three years, they have not been extraordinary. CEO pay isn't exceptionally high, but considering poor 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. We identified 4 warning signs for Essex Property Trust (2 don't sit too well with us!) that you should be aware of before investing here.
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.
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