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Is RF Industries, Ltd.'s (NASDAQ:RFIL) CEO Salary Justified?

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Simply Wall St
·3 min read
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In 2017, Rob Dawson was appointed CEO of RF Industries, Ltd. (NASDAQ:RFIL). This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. After that, we will consider the growth in the business. 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.

Check out our latest analysis for RF Industries

How Does Rob Dawson's Compensation Compare With Similar Sized Companies?

At the time of writing, our data says that RF Industries, Ltd. has a market cap of US$47m, and reported total annual CEO compensation of US$362k for the year to October 2019. That's actually a decrease on the year before. While we always look at total compensation first, we note that the salary component is less, at US$327k. We looked at a group of companies with market capitalizations under US$200m, and the median CEO total compensation was US$609k.

Pay mix tells us a lot about how a company functions versus the wider industry, and it's no different in the case of RF Industries. On a sector level, around 37% of total compensation represents salary and 63% is other remuneration. According to our research, RF Industries has allocated a higher percentage of pay to salary in comparison to the broader sector.

Most shareholders would consider it a positive that Rob Dawson takes less total compensation than the CEOs of most similar size companies, leaving more for shareholders. While this is a good thing, you'll need to understand the business better before you can form an opinion. You can see a visual representation of the CEO compensation at RF Industries, below.

NasdaqGM:RFIL CEO Compensation April 27th 2020
NasdaqGM:RFIL CEO Compensation April 27th 2020

Is RF Industries, Ltd. Growing?

Over the last three years RF Industries, Ltd. has seen earnings per share (EPS) move in a positive direction by an average of 78% per year (using a line of best fit). It achieved revenue growth of 8.0% over the last year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's good to see a bit of revenue growth, as this suggests the business is able to grow sustainably. It could be important to check this free visual depiction of what analysts expect for the future.

Has RF Industries, Ltd. Been A Good Investment?

I think that the total shareholder return of 218%, over three years, would leave most RF Industries, Ltd. shareholders smiling. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.

In Summary...

RF Industries, Ltd. is currently paying its CEO below what is normal for companies of its size.

Considering the underlying business is growing earnings, this would suggest the pay is modest. And given most shareholders are probably very happy with recent returns, you might even think that Rob Dawson deserves a raise! It's not often we see shareholders do so well, and yet the CEO is paid modestly. It would be even more positive if company insiders are buying shares. Moving away from CEO compensation for the moment, we've identified 4 warning signs for RF Industries that you should be aware of before investing.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.

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.