Stock Analysis

Kimco Realty Corporation's (NYSE:KIM) CEO Compensation Looks Acceptable To Us And Here's Why

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NYSE:KIM
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Despite strong share price growth of 76% for Kimco Realty Corporation (NYSE:KIM) over the last few years, earnings growth has been disappointing, which suggests something is amiss. These concerns will be at the front of shareholders' minds as they go into the AGM coming up on 27 April 2021. It would also be an opportunity for them to influence management through exercising their voting power on company resolutions, including CEO and executive remuneration, which could impact on firm performance in the future. From the data that we gathered, we think that shareholders should hold off on a raise on CEO compensation until performance starts to show some improvement.

See our latest analysis for Kimco Realty

Comparing Kimco Realty Corporation's CEO Compensation With the industry

Our data indicates that Kimco Realty Corporation has a market capitalization of US$8.6b, and total annual CEO compensation was reported as US$7.7m for the year to December 2020. That's a notable increase of 11% on last year. While we always look at total compensation first, our analysis shows that the salary component is less, at US$1.0m.

On comparing similar companies from the same industry with market caps ranging from US$4.0b to US$12b, we found that the median CEO total compensation was US$6.0m. From this we gather that Conor Flynn is paid around the median for CEOs in the industry. What's more, Conor Flynn holds US$15m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component20202019Proportion (2020)
Salary US$1.0m US$1.0m 13%
Other US$6.7m US$5.9m 87%
Total CompensationUS$7.7m US$6.9m100%

On an industry level, around 15% of total compensation represents salary and 85% is other remuneration. In Kimco Realty'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.

ceo-compensation
NYSE:KIM CEO Compensation April 21st 2021

A Look at Kimco Realty Corporation's Growth Numbers

Kimco Realty Corporation has reduced its funds from operations (FFO) by 17% over the last one year. Its revenue is down 8.7% over the previous year.

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. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.

Has Kimco Realty Corporation Been A Good Investment?

We think that the total shareholder return of 76%, over three years, would leave most Kimco 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.

In Summary...

While the return to shareholders does look promising, it's hard to ignore the lack of earnings growth and this makes us question whether these strong returns will continue. Shareholders should make the most of the coming opportunity to question the board on key concerns they may have and revisit their investment thesis with regards to the company.

CEO pay is simply one of the many factors that need to be considered while examining business performance. We did our research and identified 4 warning signs (and 2 which are a bit concerning) in Kimco Realty we think you should know about.

Important note: Kimco Realty 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.

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