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The RMR Group Inc.'s (NASDAQ:RMR) CEO Might Not Expect Shareholders To Be So Generous This Year

·3 min read

Shareholders will probably not be too impressed with the underwhelming results at The RMR Group Inc. (NASDAQ:RMR) recently. Shareholders will be interested in what the board will have to say about turning performance around at the next AGM on 10 March 2022. They will also get a chance to influence managerial decision-making through voting on resolutions such as executive remuneration, which may impact firm value in the future. The data we present below explains why we think CEO compensation is not consistent with recent performance.

See our latest analysis for RMR Group

Comparing The RMR Group Inc.'s CEO Compensation With the industry

Our data indicates that The RMR Group Inc. has a market capitalization of US$932m, and total annual CEO compensation was reported as US$4.4m for the year to September 2021. We note that's an increase of 14% above last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$350k.

On comparing similar companies from the same industry with market caps ranging from US$400m to US$1.6b, we found that the median CEO total compensation was US$2.3m. This suggests that Adam Portnoy is paid more than the median for the industry. What's more, Adam Portnoy holds US$5.1m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component

2021

2020

Proportion (2021)

Salary

US$350k

US$350k

8%

Other

US$4.1m

US$3.5m

92%

Total Compensation

US$4.4m

US$3.9m

100%

On an industry level, roughly 29% of total compensation represents salary and 71% is other remuneration. RMR Group sets aside a smaller share of compensation for salary, in comparison to the overall industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

ceo-compensation
ceo-compensation

A Look at The RMR Group Inc.'s Growth Numbers

Over the last three years, The RMR Group Inc. has shrunk its earnings per share by 39% per year. In the last year, its revenue is up 9.4%.

Overall this is not a very positive result for shareholders. And the modest revenue growth over 12 months isn't much comfort against the reduced EPS. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.

Has The RMR Group Inc. Been A Good Investment?

The return of -40% over three years would not have pleased The RMR Group Inc. shareholders. So shareholders would probably want the company to be less generous with CEO compensation.

To Conclude...

Along with the business performing poorly, shareholders have suffered with poor share price returns on their investments, suggesting that there's little to no chance of them being in favor of a CEO pay raise. At the upcoming AGM, they can question the management's plans and strategies to turn performance around and reassess their investment thesis in regards to the company.

CEO pay is simply one of the many factors that need to be considered while examining business performance. That's why we did our research, and identified 2 warning signs for RMR Group (of which 1 can't be ignored!) that you should know about in order to have a holistic understanding of the stock.

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

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.