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Daniel Knotts has been the CEO of R.R. Donnelley & Sons Company (NYSE:RRD) since 2016. This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. After that, we will consider the growth in the business. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. This method should give us information to assess how appropriately the company pays the CEO.
How Does Daniel Knotts's Compensation Compare With Similar Sized Companies?
According to our data, R.R. Donnelley & Sons Company has a market capitalization of US$342m, and pays its CEO total annual compensation worth US$7.1m. (This is based on the year to December 2017). We think total compensation is more important but we note that the CEO salary is lower, at US$950k. We examined companies with market caps from US$200m to US$800m, and discovered that the median CEO total compensation of that group was US$1.5m.
It would therefore appear that R.R. Donnelley & Sons Company pays Daniel Knotts more than the median CEO remuneration at companies of a similar size, in the same market. However, this fact alone doesn't mean the remuneration is too high. A closer look at the performance of the underlying business will give us a better idea about whether the pay is particularly generous.
The graphic below shows how CEO compensation at R.R. Donnelley & Sons has changed from year to year.
Is R.R. Donnelley & Sons Company Growing?
On average over the last three years, R.R. Donnelley & Sons Company has grown earnings per share (EPS) by 17% each year (using a line of best fit). Its revenue is down -2.0% over last year.
This demonstrates that the company has been improving recently. A good result. While it would be good to see revenue growth, profits matter more in the end. Shareholders might be interested in this free visualization of analyst forecasts.
Has R.R. Donnelley & Sons Company Been A Good Investment?
Since shareholders would have lost about 76% over three years, some R.R. Donnelley & Sons Company shareholders would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.
We compared total CEO remuneration at R.R. Donnelley & Sons Company with the amount paid at companies with a similar market capitalization. We found that it pays well over the median amount paid in the benchmark group.
However we must not forget that the EPS growth has been very strong over three years. On the other hand returns to investors over the same period have probably disappointed many. Considering the per share profit growth, but keeping in mind the weak returns, we'd need more time to form a view on CEO compensation. If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at R.R. Donnelley & Sons.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.
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.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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. Thank you for reading.