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Glenn Elith has been the CEO of RedHill Education Limited (ASX:RDH) since 2012, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.
Comparing RedHill Education Limited's CEO Compensation With the industry
According to our data, RedHill Education Limited has a market capitalization of AU$26m, and paid its CEO total annual compensation worth AU$647k over the year to June 2020. Notably, that's an increase of 13% over the year before. In particular, the salary of AU$404.7k, makes up a huge portion of the total compensation being paid to the CEO.
In comparison with other companies in the industry with market capitalizations under AU$283m, the reported median total CEO compensation was AU$519k. From this we gather that Glenn Elith is paid around the median for CEOs in the industry. Moreover, Glenn Elith also holds AU$169k worth of RedHill Education stock directly under their own name.
Talking in terms of the industry, salary represented approximately 81% of total compensation out of all the companies we analyzed, while other remuneration made up 19% of the pie. It's interesting to note that RedHill Education allocates a smaller portion of compensation to salary in comparison to the broader industry. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.
A Look at RedHill Education Limited's Growth Numbers
RedHill Education Limited has reduced its earnings per share by 109% a year over the last three years. It achieved revenue growth of 9.7% over the last year.
Few shareholders would be pleased to read that EPS have declined. The modest increase in revenue in the last year isn't enough to make us overlook the disappointing change in EPS. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.
Has RedHill Education Limited Been A Good Investment?
Since shareholders would have lost about 67% over three years, some RedHill Education Limited investors would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.
As we noted earlier, RedHill Education pays its CEO in line with similar-sized companies belonging to the same industry. Meanwhile, EPS growth and shareholder returns have been in the red for the last three years. We'd stop short of saying compensation is inappropriate, but we would understand if shareholders had questions regarding a future raise.
CEO pay is simply one of the many factors that need to be considered while examining business performance. That's why we did our research, and identified 4 warning signs for RedHill Education (of which 2 make us uncomfortable!) 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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