How Should Investors React To RM plc's (LON:RM.) CEO Pay?
David Brooks became the CEO of RM plc (LON:RM.) in 2013. First, this article will compare CEO compensation with compensation at similar sized companies. Then we'll look at a snap shot of the business growth. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This process should give us an idea about how appropriately the CEO is paid.
View our latest analysis for RM
How Does David Brooks's Compensation Compare With Similar Sized Companies?
At the time of writing, our data says that RM plc has a market cap of UK£237m, and reported total annual CEO compensation of UK£982k for the year to November 2018. We think total compensation is more important but we note that the CEO salary is lower, at UK£323k. We further remind readers that the CEO may face performance requirements to receive the non-salary part of the total compensation. We examined companies with market caps from UK£154m to UK£614m, and discovered that the median CEO total compensation of that group was UK£664k.
As you can see, David Brooks is paid more than the median CEO pay at companies of a similar size, in the same market. However, this does not necessarily mean RM plc is paying too much. We can get a better idea of how generous the pay is by looking at the performance of the underlying business.
You can see a visual representation of the CEO compensation at RM, below.
Is RM plc Growing?
On average over the last three years, RM plc has grown earnings per share (EPS) by 17% each year (using a line of best fit). Its revenue is up 5.8% over last year.
This demonstrates that the company has been improving recently. A good result. It's good to see a bit of revenue growth, as this suggests the business is able to grow sustainably. You might want to check this free visual report on analyst forecasts for future earnings.
Has RM plc Been A Good Investment?
I think that the total shareholder return of 122%, over three years, would leave most RM plc 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...
We compared total CEO remuneration at RM plc with the amount paid at companies with a similar market capitalization. Our data suggests that it pays above the median CEO pay within that group.
However, the earnings per share growth over three years is certainly impressive. Even better, returns to shareholders have been plentiful, over the same time period. So, considering this good performance, the CEO compensation may be quite appropriate. Shareholders may want to check for free if RM insiders are buying or selling shares.
Important note: RM may not be the best stock to buy. You might find something better in this list of interesting companies with high ROE and low debt.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.
