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This article will reflect on the compensation paid to Frank Sullivan who has served as CEO of RPM International Inc. (NYSE:RPM) since 2002. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for RPM International.
Comparing RPM International Inc.'s CEO Compensation With the industry
Our data indicates that RPM International Inc. has a market capitalization of US$11b, and total annual CEO compensation was reported as US$9.2m for the year to May 2020. That's a notable increase of 9.4% on last year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$970k.
For comparison, other companies in the industry with market capitalizations above US$8.0b, reported a median total CEO compensation of US$11m. This suggests that RPM International remunerates its CEO largely in line with the industry average. Furthermore, Frank Sullivan directly owns US$88m worth of shares in the company, implying that they are deeply invested in the company's success.
On an industry level, around 19% of total compensation represents salary and 81% is other remuneration. It's interesting to note that RPM International 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.
A Look at RPM International Inc.'s Growth Numbers
RPM International Inc. has seen its earnings per share (EPS) increase by 7.9% a year over the past three years. Its revenue is up 1.9% over the last year.
We'd prefer higher revenue growth, but it is good to see modest EPS growth. So there are some positives here, but not enough to earn high praise. 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 RPM International Inc. Been A Good Investment?
We think that the total shareholder return of 76%, over three years, would leave most RPM International Inc. shareholders smiling. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.
As we touched on above, RPM International Inc. is currently paying a compensation that's close to the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. However, the company's EPS growth numbers over the last three years is not that impressive. Meanwhile, shareholder returns have remained positive over the same time frame. There is room for improved company performance, but we don't see the CEO compensation as a big issue here.
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. That's why we did some digging and identified 1 warning sign for RPM International that you should be aware of before investing.
Important note: RPM International is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE 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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