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Does R3D Global Limited's (ASX:R3D) CEO Pay Matter?

Simply Wall St

Florence Fang became the CEO of R3D Global Limited (ASX:R3D) in 2017. This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. Then we'll look at a snap shot of the business growth. 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.

Check out our latest analysis for R3D Global

How Does Florence Fang's Compensation Compare With Similar Sized Companies?

According to our data, R3D Global Limited has a market capitalization of AU$2.3m, and paid its CEO total annual compensation worth AU$120k over the year to June 2019. We think total compensation is more important but we note that the CEO salary is lower, at AU$110k. We examined a group of similar sized companies, with market capitalizations of below AU$304m. The median CEO total compensation in that group is AU$383k.

A first glance this seems like a real positive for shareholders, since Florence Fang is paid less than the average total compensation paid by similar sized companies. However, before we heap on the praise, we should delve deeper to understand business performance.

The graphic below shows how CEO compensation at R3D Global has changed from year to year.

ASX:R3D CEO Compensation, February 29th 2020

Is R3D Global Limited Growing?

Over the last three years R3D Global Limited has grown its earnings per share (EPS) by an average of 24% per year (using a line of best fit). Its revenue is up 100% over last year.

This shows that the company has improved itself over the last few years. Good news for shareholders. The combination of strong revenue growth with medium-term earnings per share improvement certainly points to the kind of growth I like to see. We don't have analyst forecasts, but you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.

Has R3D Global Limited Been A Good Investment?

Since shareholders would have lost about 45% over three years, some R3D Global Limited shareholders would surely be feeling negative emotions. So shareholders would probably think the company shouldn't be too generous with CEO compensation.

In Summary...

It looks like R3D Global Limited pays its CEO less than similar sized companies.

Many would consider this to indicate that the pay is modest since the business is growing. Despite some positives, it is likely that shareholders wanted better returns, given the performance over the last three years. So while we would not say that Florence Fang is generously paid, it would be good to see an improvement in business performance before too an increase in pay. In this case we may want to look deeper into the company. There are some real positives and we could see improved returns in the longer term. If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at R3D Global.

Important note: R3D Global 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.