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How Does Rentokil Initial's (LON:RTO) CEO Pay Compare With Company Performance?

Simply Wall St
·4 mins read

This article will reflect on the compensation paid to Andy Ransom who has served as CEO of Rentokil Initial plc (LON:RTO) since 2013. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Rentokil Initial.

Check out our latest analysis for Rentokil Initial

How Does Total Compensation For Andy Ransom Compare With Other Companies In The Industry?

Our data indicates that Rentokil Initial plc has a market capitalization of UK£10b, and total annual CEO compensation was reported as UK£4.6m for the year to December 2019. Notably, that's a decrease of 8.1% over the year before. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at UK£765k.

In comparison with other companies in the industry with market capitalizations over UK£6.2b , the reported median total CEO compensation was UK£3.7m. So it looks like Rentokil Initial compensates Andy Ransom in line with the median for the industry. Furthermore, Andy Ransom directly owns UK£8.6m worth of shares in the company, implying that they are deeply invested in the company's success.

Component

2019

2018

Proportion (2019)

Salary

UK£765k

UK£750k

17%

Other

UK£3.8m

UK£4.2m

83%

Total Compensation

UK£4.6m

UK£5.0m

100%

Talking in terms of the industry, salary represented approximately 51% of total compensation out of all the companies we analyzed, while other remuneration made up 49% of the pie. It's interesting to note that Rentokil Initial allocates a smaller portion of compensation to salary 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.

ceo-compensation
ceo-compensation

Rentokil Initial plc's Growth

Rentokil Initial plc has seen its earnings per share (EPS) increase by 19% a year over the past three years. In the last year, its revenue is up 9.8%.

Shareholders would be glad to know that the company has improved itself over the last few years. It's good to see a bit of revenue growth, as this suggests the business is able to grow sustainably. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Rentokil Initial plc Been A Good Investment?

Most shareholders would probably be pleased with Rentokil Initial plc for providing a total return of 95% over three years. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.

To Conclude...

As we noted earlier, Rentokil Initial pays its CEO in line with similar-sized companies belonging to the same industry. Few would be critical of the leadership, since returns have been juicy and earnings are moving in the right direction. Indeed, many might consider that Andy is compensated rather modestly, given the solid company performance! In fact, shareholders might even think the CEO deserves a raise as a reward due to the fantastic returns generated.

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 2 warning signs for Rentokil Initial that investors should look into moving forward.

Switching gears from Rentokil Initial, 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@simplywallst.com.