Shareholders Will Probably Not Have Any Issues With REX American Resources Corporation's (NYSE:REX) CEO Compensation
The performance at REX American Resources Corporation (NYSE:REX) has been rather lacklustre of late and shareholders may be wondering what CEO Zafar Rizvi is planning to do about this. One way they can exercise their influence on management is through voting on resolutions, such as executive remuneration at the next AGM, coming up on 16 June 2021. Voting on executive pay could be a powerful way to influence management, as studies have shown that the right compensation incentives impact company performance. We think CEO compensation looks appropriate given the data we have put together.
Check out our latest analysis for REX American Resources
Comparing REX American Resources Corporation's CEO Compensation With the industry
Our data indicates that REX American Resources Corporation has a market capitalization of US$566m, and total annual CEO compensation was reported as US$359k for the year to January 2021. That's a notable decrease of 35% on last year. In particular, the salary of US$225.0k, makes up a huge portion of the total compensation being paid to the CEO.
For comparison, other companies in the same industry with market capitalizations ranging between US$200m and US$800m had a median total CEO compensation of US$1.3m. This suggests that Zafar Rizvi is paid below the industry median. Furthermore, Zafar Rizvi directly owns US$5.7m worth of shares in the company, implying that they are deeply invested in the company's success.
Component | 2021 | 2020 | Proportion (2021) |
Salary | US$225k | US$225k | 63% |
Other | US$134k | US$324k | 37% |
Total Compensation | US$359k | US$549k | 100% |
Talking in terms of the industry, salary represented approximately 20% of total compensation out of all the companies we analyzed, while other remuneration made up 80% of the pie. REX American Resources is paying a higher share of its remuneration through a salary in comparison to the overall industry. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.
A Look at REX American Resources Corporation's Growth Numbers
REX American Resources Corporation has reduced its earnings per share by 24% a year over the last three years. It achieved revenue growth of 14% over the last year.
Overall this is not a very positive result for shareholders. And while it's good to see some good revenue growth recently, the growth isn't really fast enough for us to put aside my concerns around EPS. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.
Has REX American Resources Corporation Been A Good Investment?
With a total shareholder return of 27% over three years, REX American Resources Corporation shareholders would, in general, be reasonably content. But they probably wouldn't be so happy as to think the CEO should be paid more than is normal, for companies around this size.
In Summary...
While it's true that shareholders have seen decent returns, it's hard to overlook the lack of earnings growth and this makes us wonder if the current returns can continue. These concerns could be addressed to the board and shareholders should revisit their investment thesis to see if it still makes sense.
While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. We did our research and spotted 1 warning sign for REX American Resources that investors should look into moving forward.
Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies that have HIGH return on equity and low debt.
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. 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.
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