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Is Red Rock Resorts, Inc.'s (NASDAQ:RRR) CEO Salary Justified?

Simply Wall St

In 2015 Frank Fertitta was appointed CEO of Red Rock Resorts, Inc. (NASDAQ:RRR). This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. Next, we'll consider growth that the business demonstrates. And finally - as a second measure of performance - we will look at the returns shareholders have received over the last few years. This method should give us information to assess how appropriately the company pays the CEO.

See our latest analysis for Red Rock Resorts

How Does Frank Fertitta's Compensation Compare With Similar Sized Companies?

At the time of writing, our data says that Red Rock Resorts, Inc. has a market cap of US$2.7b, and reported total annual CEO compensation of US$2.0m for the year to December 2018. We think total compensation is more important but we note that the CEO salary is lower, at US$1.0m. 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.

A first glance this seems like a real positive for shareholders, since Frank Fertitta is paid less than the average total compensation paid by similar sized companies. While this is a good thing, you'll need to understand the business better before you can form an opinion.

You can see, below, how CEO compensation at Red Rock Resorts has changed over time.

NasdaqGS:RRR CEO Compensation, December 6th 2019

Is Red Rock Resorts, Inc. Growing?

Red Rock Resorts, Inc. has increased its earnings per share (EPS) by an average of 13% a year, over the last three years (using a line of best fit). It achieved revenue growth of 11% over the last year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. This sort of respectable year-on-year revenue growth is often seen at a healthy, growing business. Shareholders might be interested in this free visualization of analyst forecasts.

Has Red Rock Resorts, Inc. Been A Good Investment?

Red Rock Resorts, Inc. has not done too badly by shareholders, with a total return of 0.1%, over three years. But they would probably prefer not to see CEO compensation far in excess of the median.

In Summary...

It appears that Red Rock Resorts, Inc. remunerates its CEO below most similar sized companies.

Considering the underlying business is growing earnings, this would suggest the pay is modest. While some might be keen on seeing higher returns, our short analysis has not produced any evidence to suggest Frank Fertitta is overcompensated. Few would complain about reasonable CEO remuneration when the business is growing earnings per share. But for me, it's even better if insiders are also buying shares with their own cold, hard, cash. If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at Red Rock Resorts.

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.

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.

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. Thank you for reading.