Here's Why We Think Rio Tinto Group's (LON:RIO) CEO Compensation Looks Fair for the time being
Key Insights
Rio Tinto Group to hold its Annual General Meeting on 4th of April
CEO Jakob Stausholm's total compensation includes salary of US$1.53m
The total compensation is similar to the average for the industry
Over the past three years, Rio Tinto Group's EPS grew by 0.9% and over the past three years, the total shareholder return was 18%
Under the guidance of CEO Jakob Stausholm, Rio Tinto Group (LON:RIO) has performed reasonably well recently. This is something shareholders will keep in mind as they cast their votes on company resolutions such as executive remuneration in the upcoming AGM on 4th of April. We present our case of why we think CEO compensation looks fair.
Check out our latest analysis for Rio Tinto Group
How Does Total Compensation For Jakob Stausholm Compare With Other Companies In The Industry?
Our data indicates that Rio Tinto Group has a market capitalization of UK£85b, and total annual CEO compensation was reported as US$6.1m for the year to December 2023. Notably, that's an increase of 16% over the year before. We think total compensation is more important but our data shows that the CEO salary is lower, at US$1.5m.
For comparison, other companies in the British Metals and Mining industry with market capitalizations above UK£6.3b, reported a median total CEO compensation of US$4.7m. So it looks like Rio Tinto Group compensates Jakob Stausholm in line with the median for the industry. Furthermore, Jakob Stausholm directly owns UK£8.9m worth of shares in the company, implying that they are deeply invested in the company's success.
Component | 2023 | 2022 | Proportion (2023) |
Salary | US$1.5m | US$1.5m | 25% |
Other | US$4.5m | US$3.8m | 75% |
Total Compensation | US$6.1m | US$5.2m | 100% |
On an industry level, around 64% of total compensation represents salary and 36% is other remuneration. In Rio Tinto Group's 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.
A Look at Rio Tinto Group's Growth Numbers
Rio Tinto Group saw earnings per share stay pretty flat over the last three years. Its revenue is down 2.7% over the previous year.
We would prefer it if there was revenue growth, but the modest EPS growth gives us some relief. It's hard to reach a conclusion about business performance right now. This may be one to watch. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..
Has Rio Tinto Group Been A Good Investment?
Rio Tinto Group has generated a total shareholder return of 18% over three years, so most shareholders would be reasonably content. But they probably wouldn't be so happy as to think the CEO should be paid more than is normal, for companies around this size.
To Conclude...
Seeing that the company has put up a decent performance, only a few shareholders, if any at all, might have questions about the CEO pay in the upcoming AGM. However, we still think that any proposed increase in CEO compensation will be examined closely to make sure the compensation is appropriate and linked to performance.
While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. That's why we did some digging and identified 2 warning signs for Rio Tinto Group that you should be aware of before investing.
Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.
