In 2016 Denny Post was appointed CEO of Red Robin Gourmet Burgers, Inc. (NASDAQ:RRGB). This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. 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. This method should give us information to assess how appropriately the company pays the CEO.
How Does Denny Post’s Compensation Compare With Similar Sized Companies?
At the time of writing our data says that Red Robin Gourmet Burgers, Inc. has a market cap of US$374m, and is paying total annual CEO compensation of US$3.6m. (This number is for the twelve months until December 2017). While we always look at total compensation first, we note that the salary component is less, at US$744k. When we examined a selection of companies with market caps ranging from US$200m to US$800m, we found the median CEO total compensation was US$1.6m.
It would therefore appear that Red Robin Gourmet Burgers, Inc. pays Denny Post 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 better assess whether the pay is overly generous by looking into the underlying business performance.
You can see a visual representation of the CEO compensation at Red Robin Gourmet Burgers, below.
Is Red Robin Gourmet Burgers, Inc. Growing?
Red Robin Gourmet Burgers, Inc. has reduced its earnings per share by an average of 53% a year, over the last three years (measured with a line of best fit). In the last year, its revenue is down -3.5%.
Few shareholders would be pleased to read that earnings per share are lower over three years. This is compounded by the fact revenue is actually down on last year. It’s hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. You might want to check this free visual report on analyst forecasts for future earnings.
Has Red Robin Gourmet Burgers, Inc. Been A Good Investment?
Given the total loss of 55% over three years, many shareholders in Red Robin Gourmet Burgers, Inc. are probably rather dissatisfied, to say the least. It therefore might be upsetting for shareholders if the CEO were paid generously.
We compared total CEO remuneration at Red Robin Gourmet Burgers, Inc. with the amount paid at companies with a similar market capitalization. Our data suggests that it pays above the median CEO pay within that group.
We think many shareholders would be underwhelmed with the business growth over the last three years.
Just as bad, share price gains for investors have failed to materialize, over the same period. This analysis suggests to us that the CEO is paid too generously! Shareholders may want to check for free if Red Robin Gourmet Burgers insiders are buying or selling shares.
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.
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If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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.