Andy Ransom became the CEO of Rentokil Initial plc (LON:RTO) in 2013. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at other big companies. After that, we will consider the growth in the business. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This method should give us information to assess how appropriately the company pays the CEO.
How Does Andy Ransom's Compensation Compare With Similar Sized Companies?
According to our data, Rentokil Initial plc has a market capitalization of UK£8.1b, and paid its CEO total annual compensation worth UK£4.4m over the year to December 2018. We think total compensation is more important but we note that the CEO salary is lower, at UK£750k. We further remind readers that the CEO may face performance requirements to receive the non-salary part of the total compensation. We looked at a group of companies with market capitalizations over UK£6.1b and the median CEO total compensation was UK£3.4m. There aren't very many mega-cap companies, so we had to take a wide range to get a meaningful comparison figure.
That means Andy Ransom receives fairly typical remuneration for the CEO of a large company. This doesn't tell us a whole lot on its own, but looking at the performance of the actual business will give us useful context.
You can see, below, how CEO compensation at Rentokil Initial has changed over time.
Is Rentokil Initial plc Growing?
Over the last three years Rentokil Initial plc has shrunk its earnings per share by an average of 45% per year (measured with a line of best fit). In the last year, its revenue is up 10%.
Unfortunately, earnings per share have trended lower over the last three years. There's no doubt that the silver lining is that revenue is up. But it isn't sufficiently fast growth to overlook the fact that earnings per share has gone backwards over three years. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. It could be important to check this free visual depiction of what analysts expect for the future.
Has Rentokil Initial plc Been A Good Investment?
Boasting a total shareholder return of 106% over three years, Rentokil Initial plc has done well by shareholders. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.
Andy Ransom is paid around the same as most CEOs of large companies.
The company isn't growing earnings per share, but shareholder returns have been strong over the last three years. So we think most shareholders wouldn't be too worried about CEO compensation, which is close to the median for large companies. Whatever your view on compensation, you might want to check if insiders are buying or selling Rentokil Initial shares (free trial).
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.
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