What Does Redflex Holdings' (ASX:RDF) CEO Pay Reveal?
This article will reflect on the compensation paid to Mark Talbot who has served as CEO of Redflex Holdings Limited (ASX:RDF) since 2017. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.
Check out our latest analysis for Redflex Holdings
How Does Total Compensation For Mark Talbot Compare With Other Companies In The Industry?
At the time of writing, our data shows that Redflex Holdings Limited has a market capitalization of AU$61m, and reported total annual CEO compensation of AU$1.4m for the year to June 2020. We note that's a small decrease of 3.7% on last year. We think total compensation is more important but our data shows that the CEO salary is lower, at AU$597k.
For comparison, other companies in the industry with market capitalizations below AU$263m, reported a median total CEO compensation of AU$380k. Accordingly, our analysis reveals that Redflex Holdings Limited pays Mark Talbot north of the industry median. Furthermore, Mark Talbot directly owns AU$426k worth of shares in the company.
Component | 2020 | 2019 | Proportion (2020) |
Salary | AU$597k | AU$608k | 42% |
Other | AU$809k | AU$851k | 58% |
Total Compensation | AU$1.4m | AU$1.5m | 100% |
Speaking on an industry level, nearly 57% of total compensation represents salary, while the remainder of 43% is other remuneration. In Redflex Holdings' case, non-salary compensation represents a greater slice of total remuneration, 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.
Redflex Holdings Limited's Growth
Redflex Holdings Limited has seen its earnings per share (EPS) increase by 62% a year over the past three years. Its revenue is down 14% over the previous year.
Shareholders would be glad to know that the company has improved itself over the last few years. It's always a tough situation when revenues are not growing, but ultimately profits are more important. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.
Has Redflex Holdings Limited Been A Good Investment?
Given the total shareholder loss of 32% over three years, many shareholders in Redflex Holdings Limited are probably rather dissatisfied, to say the least. This suggests it would be unwise for the company to pay the CEO too generously.
In Summary...
As we touched on above, Redflex Holdings Limited is currently paying its CEO higher than the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. However, we must not forget that the EPS growth has been very strong, but we cannot say the same about the uninspiring shareholder returns (over the last three years). Although we don't think the CEO pay is too high, considering negative investor returns, it is more generous than modest.
While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. That's why we did some digging and identified 1 warning sign for Redflex Holdings that investors should think about before committing capital to this stock.
Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies that have HIGH return on equity and low debt.
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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