A Quick Analysis On Red Rock Resorts' (NASDAQ:RRR) CEO Compensation
This article will reflect on the compensation paid to Frank Fertitta who has served as CEO of Red Rock Resorts, Inc. (NASDAQ:RRR) since 2015. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Red Rock Resorts.
Check out our latest analysis for Red Rock Resorts
How Does Total Compensation For Frank Fertitta Compare With Other Companies In The Industry?
At the time of writing, our data shows that Red Rock Resorts, Inc. has a market capitalization of US$2.1b, and reported total annual CEO compensation of US$2.0m for the year to December 2019. This means that the compensation hasn't changed much from last year. We note that the salary portion, which stands at US$1.00m constitutes the majority of total compensation received by the CEO.
On examining similar-sized companies in the industry with market capitalizations between US$1.0b and US$3.2b, we discovered that the median CEO total compensation of that group was US$5.0m. That is to say, Frank Fertitta is paid under the industry median. What's more, Frank Fertitta holds US$74m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.
Component | 2019 | 2018 | Proportion (2019) |
Salary | US$1.0m | US$1.0m | 51% |
Other | US$955k | US$958k | 49% |
Total Compensation | US$2.0m | US$2.0m | 100% |
On an industry level, roughly 25% of total compensation represents salary and 75% is other remuneration. It's interesting to note that Red Rock Resorts pays out a greater portion of remuneration through salary, compared to the industry. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.
A Look at Red Rock Resorts, Inc.'s Growth Numbers
Over the last three years, Red Rock Resorts, Inc. has shrunk its earnings per share by 76% per year. In the last year, its revenue is down 20%.
Overall this is not a very positive result for shareholders. 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. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..
Has Red Rock Resorts, Inc. Been A Good Investment?
With a three year total loss of 21% for the shareholders, Red Rock Resorts, Inc. would certainly have some dissatisfied shareholders. Therefore, it might be upsetting for shareholders if the CEO were paid generously.
To Conclude...
As we touched on above, Red Rock Resorts, Inc. is currently paying its CEO below the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. While we are quite underwhelmed with EPS growth, the shareholder returns over the past three years have also failed to impress us. Although we wouldn’t say CEO compensation is high, it’s tough to foresee shareholders warming up to thoughts of a bump anytime soon.
We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. That's why we did our research, and identified 2 warning signs for Red Rock Resorts (of which 1 is a bit unpleasant!) that you should know about in order to have a holistic understanding of the stock.
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.
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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