Key Insights

• Empire State Realty Trust to hold its Annual General Meeting on 9th of May
• CEO Tony Malkin's total compensation includes salary of US$849.7k
• The overall pay is 183% above the industry average
• Over the past three years, Empire State Realty Trust's FFO grew by 19% per year and over the past three years, the total loss to shareholders 17%

The underwhelming share price performance of Empire State Realty Trust, Inc. (NYSE:ESRT) in the past three years would have disappointed many shareholders. What is concerning is that despite positive EPS growth, the share price has not tracked the trend in fundamentals. These are some of the concerns that shareholders may want to bring up at the next AGM held on 9th of May. Voting on resolutions such as executive remuneration and other matters could also be a way to influence management. Here's our take on why we think shareholders may want to be cautious of approving a raise for the CEO at the moment.

How Does Total Compensation For Tony Malkin Compare With Other Companies In The Industry?

Our data indicates that Empire State Realty Trust, Inc. has a market capitalization of US$2.5b, and total annual CEO compensation was reported as US$9.0m for the year to December 2023. That's a modest increase of 6.8% on the prior year. While we always look at total compensation first, our analysis shows that the salary component is less, at US$850k.

On comparing similar companies from the American REITs industry with market caps ranging from US$2.0b to US$6.4b, we found that the median CEO total compensation was US$3.2m. This suggests that Tony Malkin is paid more than the median for the industry. Moreover, Tony Malkin also holds US$6.5m worth of Empire State Realty Trust stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

On an industry level, around 24% of total compensation represents salary and 76% is other remuneration. It's interesting to note that Empire State Realty 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.

A Look at Empire State Realty Trust, Inc.'s Growth Numbers

Empire State Realty Trust, Inc.'s funds from operations (FFO) grew 19% per yearover the last three years. Its revenue is up 6.7% over the last year.

This demonstrates that the company has been improving recently and is good news for the shareholders. It's nice to see revenue heading northwards, as this is consistent with healthy business conditions. 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 Empire State Realty Trust, Inc. Been A Good Investment?

Since shareholders would have lost about 17% over three years, some Empire State Realty Trust, Inc. investors would surely be feeling negative emotions. So shareholders would probably want the company to be less generous with CEO compensation.

In Summary...

The fact that shareholders are sitting on a loss on the value of their shares in the past few years is certainly disconcerting. The stock's movement is disjointed with the company's earnings growth, which ideally should move in the same direction. Shareholders would be keen to know what's holding the stock back when earnings have grown. The upcoming AGM will be a chance for shareholders to question the board on key matters, such as CEO remuneration or any other issues they might have and revisit their investment thesis with regards to the company.

CEO compensation can have a massive impact on performance, but it's just one element. We've identified 2 warning signs for Empire State Realty Trust that investors should be aware of in a dynamic business environment.

Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.