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Why Richardson Electronics, Ltd.'s (NASDAQ:RELL) CEO Pay Matters To You

Simply Wall St

In 1989 Edward Richardson was appointed CEO of Richardson Electronics, Ltd. (NASDAQ:RELL). First, this article will compare CEO compensation with compensation at similar sized companies. Then we'll look at a snap shot of the business growth. And finally - as a second measure of performance - we will look at the returns shareholders have received over the last few years. This process should give us an idea about how appropriately the CEO is paid.

Check out our latest analysis for Richardson Electronics

How Does Edward Richardson's Compensation Compare With Similar Sized Companies?

Our data indicates that Richardson Electronics, Ltd. is worth US$76m, and total annual CEO compensation was reported as US$1.3m for the year to June 2019. That's just a smallish increase of 6.5% on last year. While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at US$772k. We examined a group of similar sized companies, with market capitalizations of below US$200m. The median CEO total compensation in that group is US$514k.

It would therefore appear that Richardson Electronics, Ltd. pays Edward Richardson more than the median CEO remuneration at companies of a similar size, in the same market. However, this fact alone doesn't mean the remuneration is too high. We can get a better idea of how generous the pay is by looking at the performance of the underlying business.

You can see a visual representation of the CEO compensation at Richardson Electronics, below.

NasdaqGS:RELL CEO Compensation, November 1st 2019

Is Richardson Electronics, Ltd. Growing?

Richardson Electronics, Ltd. has increased its earnings per share (EPS) by an average of 42% a year, over the last three years (using a line of best fit). Its revenue is down 4.2% over last year.

This shows that the company has improved itself over the last few years. Good news for shareholders. The lack of revenue growth isn't ideal, but it is the bottom line that counts most in business. Shareholders might be interested in this free visualization of analyst forecasts.

Has Richardson Electronics, Ltd. Been A Good Investment?

Richardson Electronics, Ltd. has generated a total shareholder return of 4.5% over three years, so most shareholders wouldn't be too disappointed. But they probably don't want to see the CEO paid more than is normal for companies around the same size.

In Summary...

We compared the total CEO remuneration paid by Richardson Electronics, Ltd., and compared it to remuneration at a group of similar sized companies. Our data suggests that it pays above the median CEO pay within that group.

Importantly, though, the company has impressed with its earnings per share growth, over three years. We also note that, over the same time frame, shareholder returns haven't been bad. You might wish to research management further, but on this analysis, considering the EPS growth, we wouldn't call the CEO pay problematic. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling Richardson Electronics (free visualization of insider trades).

If you want to buy a stock that is better than Richardson Electronics, this free list of high return, low debt companies is a great place to look.

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.