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Adam Contos became the CEO of RE/MAX Holdings, Inc. (NYSE:RMAX) in 2018, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.
Comparing RE/MAX Holdings, Inc.'s CEO Compensation With the industry
According to our data, RE/MAX Holdings, Inc. has a market capitalization of US$976m, and paid its CEO total annual compensation worth US$2.1m over the year to December 2019. Notably, that's a decrease of 14% over the year before. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$650k.
For comparison, other companies in the same industry with market capitalizations ranging between US$400m and US$1.6b had a median total CEO compensation of US$4.9m. That is to say, Adam Contos is paid under the industry median. What's more, Adam Contos holds US$450k worth of shares in the company in their own name.
Speaking on an industry level, nearly 29% of total compensation represents salary, while the remainder of 71% is other remuneration. RE/MAX Holdings is largely mirroring the industry average when it comes to the share a salary enjoys in overall compensation. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.
RE/MAX Holdings, Inc.'s Growth
Over the last three years, RE/MAX Holdings, Inc. has shrunk its earnings per share by 7.3% per year. It achieved revenue growth of 5.5% over the last year.
The decline in EPS is a bit concerning. The modest increase in revenue in the last year isn't enough to make us overlook the disappointing change in EPS. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.
Has RE/MAX Holdings, Inc. Been A Good Investment?
Given the total shareholder loss of 47% over three years, many shareholders in RE/MAX Holdings, Inc. are probably rather dissatisfied, to say the least. Therefore, it might be upsetting for shareholders if the CEO were paid generously.
As previously discussed, Adam is compensated less than what is normal for CEOs of companies of similar size, and which belong to the same industry. While we are quite underwhelmed with EPS growth, the shareholder returns over the past three years have also failed to impress us. It's tough to say that Adam is earning a very high compensation, but shareholders will likely want to see healthier investor returns before agreeing that a raise is in order.
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 4 warning signs for RE/MAX 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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