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How Does Renold's (LON:RNO) CEO Pay Compare With Company Performance?

Simply Wall St
·3 min read

This article will reflect on the compensation paid to Rob Purcell who has served as CEO of Renold plc (LON:RNO) since 2013. This analysis will also assess whether Renold pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

Check out our latest analysis for Renold

How Does Total Compensation For Rob Purcell Compare With Other Companies In The Industry?

Our data indicates that Renold plc has a market capitalization of UK£29m, and total annual CEO compensation was reported as UK£378k for the year to March 2020. Notably, that's a decrease of 13% over the year before. Notably, the salary which is UK£307.0k, represents most of the total compensation being paid.

On comparing similar-sized companies in the industry with market capitalizations below UK£148m, we found that the median total CEO compensation was UK£333k. From this we gather that Rob Purcell is paid around the median for CEOs in the industry. Furthermore, Rob Purcell directly owns UK£617k worth of shares in the company.

Component

2020

2019

Proportion (2020)

Salary

UK£307k

UK£300k

81%

Other

UK£71k

UK£134k

19%

Total Compensation

UK£378k

UK£434k

100%

On an industry level, around 48% of total compensation represents salary and 52% is other remuneration. Renold pays out 81% of remuneration in the form of a salary, significantly higher than the industry average. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

ceo-compensation
ceo-compensation

Renold plc's Growth

Over the last three years, Renold plc has shrunk its earnings per share by 12% per year. In the last year, its revenue is down 13%.

Few shareholders would be pleased to read that EPS have declined. And the impression is worse when you consider revenue is down year-on-year. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.

Has Renold plc Been A Good Investment?

Given the total shareholder loss of 74% over three years, many shareholders in Renold plc are probably rather dissatisfied, to say the least. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

To Conclude...

As we noted earlier, Renold pays its CEO in line with similar-sized companies belonging to the same industry. Meanwhile, EPS growth and shareholder returns have been in the red for the last three years. Considering overall performance, shareholders will likely hold off support for a raise until results improve.

CEO pay is simply one of the many factors that need to be considered while examining business performance. We did our research and identified 6 warning signs (and 1 which shouldn't be ignored) in Renold we think you should know about.

Switching gears from Renold, 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.