In 2014 Gary Friedman was appointed CEO of RH (NYSE:RH). This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. Then we'll look at a snap shot of the business growth. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. The aim of all this is to consider the appropriateness of CEO pay levels.
How Does Gary Friedman's Compensation Compare With Similar Sized Companies?
Our data indicates that RH is worth US$4.0b, and total annual CEO compensation was reported as US$3.9m for the year to February 2019. While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at US$1.3m. We note that more than half of the total compensation is not the salary; and performance requirements may apply to this non-salary portion. 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$5.0m.
So Gary Friedman is paid around the average of the companies we looked at. Although this fact alone doesn't tell us a great deal, it becomes more relevant when considered against the business performance.
The graphic below shows how CEO compensation at RH has changed from year to year.
Is RH Growing?
Over the last three years RH has grown its earnings per share (EPS) by an average of 99% per year (using a line of best fit). Its revenue is up 5.9% over last year.
This shows that the company has improved itself over the last few years. Good news for shareholders. 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 RH Been A Good Investment?
Boasting a total shareholder return of 631% over three years, RH has done well by shareholders. 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.
Gary Friedman is paid around the same as most CEOs of similar size companies.
The company is growing earnings per share and total shareholder returns have been pleasing. Indeed, many might consider the pay rather modest, given the solid company performance! Shareholders may want to check for free if RH insiders are buying or selling shares.
If you want to buy a stock that is better than RH, this free list of high return, low debt companies is a great place to look.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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.