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Is Richelieu Hardware Ltd.'s (TSE:RCH) CEO Pay Justified?

Simply Wall St

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In 1988 Richard Lord was appointed CEO of Richelieu Hardware Ltd. (TSE:RCH). This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. 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 Richelieu Hardware

How Does Richard Lord's Compensation Compare With Similar Sized Companies?

Our data indicates that Richelieu Hardware Ltd. is worth CA$1.4b, and total annual CEO compensation is CA$2.0m. (This is based on the year to November 2018). While we always look at total compensation first, we note that the salary component is less, at CA$683k. We examined companies with market caps from CA$524m to CA$2.1b, and discovered that the median CEO total compensation of that group was CA$2.0m.

So Richard Lord 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 Richelieu Hardware has changed from year to year.

TSX:RCH CEO Compensation, July 8th 2019

Is Richelieu Hardware Ltd. Growing?

On average over the last three years, Richelieu Hardware Ltd. has grown earnings per share (EPS) by 3.8% each year (using a line of best fit). In the last year, its revenue is up 3.8%.

I'd prefer higher revenue growth, but the modest improvement in EPS is good. It's clear the performance has been quite decent, but it it falls short of outstanding,based on this information. It could be important to check this free visual depiction of what analysts expect for the future.

Has Richelieu Hardware Ltd. Been A Good Investment?

Given the total loss of 6.1% over three years, many shareholders in Richelieu Hardware Ltd. are probably rather dissatisfied, to say the least. So shareholders would probably think the company shouldn't be too generous with CEO compensation.

In Summary...

Remuneration for Richard Lord is close enough to the median pay for a CEO of a similar sized company .

We would like to see somewhat stronger per share growth. And we think the shareholder returns - over three years - have been underwhelming. So it would take a bold person to suggest the pay is too modest. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling Richelieu Hardware (free visualization of insider trades).

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

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.

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. Thank you for reading.