What Can We Learn About Rotork's (LON:ROR) CEO Compensation?

Kevin Hostetler has been the CEO of Rotork plc (LON:ROR) since 2018, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also assess whether Rotork pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

Check out our latest analysis for Rotork

How Does Total Compensation For Kevin Hostetler Compare With Other Companies In The Industry?

At the time of writing, our data shows that Rotork plc has a market capitalization of UK£2.7b, and reported total annual CEO compensation of UK£1.4m for the year to December 2019. That is, the compensation was roughly the same as last year. We think total compensation is more important but our data shows that the CEO salary is lower, at UK£604k.

For comparison, other companies in the same industry with market capitalizations ranging between UK£1.5b and UK£5.0b had a median total CEO compensation of UK£1.6m. So it looks like Rotork compensates Kevin Hostetler in line with the median for the industry. Furthermore, Kevin Hostetler directly owns UK£407k worth of shares in the company.

On an industry level, roughly 48% of total compensation represents salary and 52% is other remuneration. In Rotork's case, non-salary compensation represents a greater slice of total remuneration, 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.

Rotork plc's Growth

Over the past three years, Rotork plc has seen its earnings per share (EPS) grow by 6.5% per year. It saw its revenue drop 7.2% over the last year.

We would prefer it if there was revenue growth, but the modest improvement in EPS is good. It's hard to reach a conclusion about business performance right now. This may be one to watch. 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 Rotork plc Been A Good Investment?

Rotork plc has generated a total shareholder return of 25% over three years, so most shareholders would be reasonably content. But they probably wouldn't be so happy as to think the CEO should be paid more than is normal, for companies around this size.

In Summary...

As we touched on above, Rotork plc is currently paying a compensation that's close to the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. On the other hand, EPS and shareholder returns have been stable over the last three years, but have not grown substantially. So, although the CEO compensation seems reasonable, shareholders might want to see some further progress before they agree that Kevin should get a raise.

CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. We did our research and spotted 1 warning sign for Rotork that investors should look into moving forward.

Switching gears from Rotork, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.

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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