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Is RBC Bearings Incorporated's (NASDAQ:ROLL) CEO Being Overpaid?

Simply Wall St

Michael Hartnett became the CEO of RBC Bearings Incorporated (NASDAQ:ROLL) in 1992. This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. After that, we will consider the growth in the business. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. The aim of all this is to consider the appropriateness of CEO pay levels.

See our latest analysis for RBC Bearings

How Does Michael Hartnett's Compensation Compare With Similar Sized Companies?

Our data indicates that RBC Bearings Incorporated is worth US$4.1b, and total annual CEO compensation was reported as US$12m for the year to March 2019. While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at US$775k. We note that more than half of the total compensation is not the salary; and performance requirements may apply to this non-salary portion. As part of our analysis we looked at companies in the same jurisdiction, with market capitalizations of US$2.0b to US$6.4b. The median total CEO compensation was US$5.1m.

Thus we can conclude that Michael Hartnett receives more in total compensation than the median of a group of companies in the same market, and of similar size to RBC Bearings Incorporated. However, this doesn't necessarily mean the pay is too high. We can get a better idea of how generous the pay is by looking at the performance of the underlying business.

The graphic below shows how CEO compensation at RBC Bearings has changed from year to year.

NasdaqGS:ROLL CEO Compensation, November 14th 2019

Is RBC Bearings Incorporated Growing?

On average over the last three years, RBC Bearings Incorporated has grown earnings per share (EPS) by 16% each year (using a line of best fit). It achieved revenue growth of 3.3% over the last year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's also good to see modest revenue growth, suggesting the underlying business is healthy. Shareholders might be interested in this free visualization of analyst forecasts.

Has RBC Bearings Incorporated Been A Good Investment?

I think that the total shareholder return of 104%, over three years, would leave most RBC Bearings Incorporated shareholders smiling. 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.

In Summary...

We compared total CEO remuneration at RBC Bearings Incorporated with the amount paid at companies with a similar market capitalization. As discussed above, we discovered that the company pays more than the median of that group.

However, the earnings per share growth over three years is certainly impressive. Even better, returns to shareholders have been plentiful, over the same time period. Considering this fine result for shareholders, we daresay the CEO compensation might be apt. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling RBC Bearings (free visualization of insider trades).

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.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.