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Is Rentokil Initial plc’s (LON:RTO) CEO Overpaid Relative To Its Peers?

Andy Ransom has been the CEO of Rentokil Initial plc (LON:RTO) since 2013. 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. 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.

View our latest analysis for Rentokil Initial

How Does Andy Ransom’s Compensation Compare With Similar Sized Companies?

Our data indicates that Rentokil Initial plc is worth UK£5.8b, and total annual CEO compensation is UK£4.4m. That’s less than last year. We looked at a group of companies with market capitalizations from UK£3.1b to UK£9.2b, and the median CEO compensation was UK£2.5m.

As you can see, Andy Ransom is paid more than the median CEO pay at companies of a similar size, in the same market. However, this does not necessarily mean Rentokil Initial plc is paying too much. We can better assess whether the pay is overly generous by looking into the underlying business performance.

The graphic below shows how CEO compensation at Rentokil Initial has changed from year to year.

LSE:RTO CEO Compensation November 16th 18

Is Rentokil Initial plc Growing?

Over the last three years Rentokil Initial plc has grown its earnings per share (EPS) by an average of 50% per year. In the last year, its revenue is down -2.5%.

This shows that the company has improved itself over the last few years. Good news for shareholders. Revenue growth is a real positive for growth, but ultimately profits are more important.

You might want to check this free visual report on analyst forecasts for future earnings.

Has Rentokil Initial plc Been A Good Investment?

Boasting a total shareholder return of 118% over three years, Rentokil Initial plc has done well by shareholders. So they may not be at all concerned if the CEO is paid more than is normal for companies around the same size.

In Summary…

We compared total CEO remuneration at Rentokil Initial plc with the amount paid at companies with a similar market capitalization. We found that it pays well over the median amount paid in the benchmark group.

However we must not forget that the EPS growth has been very strong over three years. In addition, shareholders have done well over the same time period. As a result of this good performance, the CEO remuneration may well be quite reasonable. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling Rentokil Initial plc (free visualization of insider trades).

Or you might prefer gaze upon this detailed graph of past earnings, revenue and cash flow .

To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.