Key Things To Understand About Taubman Centers' (NYSE:TCO) CEO Pay Cheque

Bobby Taubman became the CEO of Taubman Centers, Inc. (NYSE:TCO) in 1990, 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 Taubman Centers pays its CEO appropriately, considering its funds from operations growth and total shareholder returns.

See our latest analysis for Taubman Centers

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

According to our data, Taubman Centers, Inc. has a market capitalization of US$3.4b, and paid its CEO total annual compensation worth US$1.4m over the year to December 2019. That's a notable decrease of 26% on last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$120k.

For comparison, other companies in the same industry with market capitalizations ranging between US$2.0b and US$6.4b had a median total CEO compensation of US$5.4m. In other words, Taubman Centers pays its CEO lower than the industry median. Moreover, Bobby Taubman also holds US$49m worth of Taubman Centers 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. It's interesting to note that Taubman Centers allocates a smaller portion of compensation to salary in comparison to the broader industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

Taubman Centers, Inc.'s Growth

Over the last three years, Taubman Centers, Inc. has shrunk its funds from operations (FFO) by 7.9% per year. Its revenue is down 4.8% over the previous year.

Few shareholders would be pleased to read that FFO have declined. And the impression is worse when you consider revenue is down year-on-year. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. 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 Taubman Centers, Inc. Been A Good Investment?

Since shareholders would have lost about 19% over three years, some Taubman Centers, Inc. investors would surely be feeling negative emotions. So shareholders would probably want the company to be lessto generous with CEO compensation.

To Conclude...

As we noted earlier, Taubman Centers pays its CEO lower than the norm for similar-sized companies belonging to the same industry. FFO growth has failed to impress us, and the same can be said about shareholder returns. We can't say the CEO compensation is high, but shareholders will be cold to a bump at this stage, considering negative investor returns.

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 3 warning signs for Taubman Centers you should be aware of, and 2 of them don't sit too well with us.

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.

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.

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