Is Reckon Limited's (ASX:RKN) CEO Overpaid Relative To Its Peers?
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The CEO of Reckon Limited (ASX:RKN) is Sam Allert. First, this article will compare CEO compensation with compensation at similar sized companies. Then we'll look at a snap shot of the business growth. 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.
Check out our latest analysis for Reckon
How Does Sam Allert's Compensation Compare With Similar Sized Companies?
Our data indicates that Reckon Limited is worth AU$63m, and total annual CEO compensation is AU$723k. (This figure is for the year to December 2018). Notably, that's an increase of 8.8% over the year before. While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at AU$504k. We looked at a group of companies with market capitalizations under AU$285m, and the median CEO total compensation was AU$357k.
It would therefore appear that Reckon Limited pays Sam Allert more than the median CEO remuneration at companies of a similar size, in the same market. However, this fact alone doesn't mean the remuneration is too high. We can get a better idea of how generous the pay is by looking at the performance of the underlying business.
You can see, below, how CEO compensation at Reckon has changed over time.
Is Reckon Limited Growing?
On average over the last three years, Reckon Limited has shrunk earnings per share by 39% each year (measured with a line of best fit). In the last year, its revenue is down -6.1%.
Sadly for shareholders, earnings per share are actually down, over three years. This is compounded by the fact revenue is actually down on last year. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. It could be important to check this free visual depiction of what analysts expect for the future.
Has Reckon Limited Been A Good Investment?
Given the total loss of 50% over three years, many shareholders in Reckon Limited are probably rather dissatisfied, to say the least. This suggests it would be unwise for the company to pay the CEO too generously.
In Summary...
We compared total CEO remuneration at Reckon Limited 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.
We think many shareholders would be underwhelmed with the business growth over the last three years.
Over the same period, investors would have come away with nothing in the way of share price gains. And we'd be remiss not to note that the CEO remuneration has increased on last year. In our opinion the CEO might be paid too generously! Shareholders may want to check for free if Reckon insiders are buying or selling shares.
If you want to buy a stock that is better than Reckon, this free list of high return, low debt companies is a great place to look.
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.
