Daniel Knotts became the CEO of R.R. Donnelley & Sons Company (NYSE:RRD) in 2016. 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.
How Does Daniel Knotts's Compensation Compare With Similar Sized Companies?
Our data indicates that R.R. Donnelley & Sons Company is worth US$272m, and total annual CEO compensation was reported as US$5.8m for the year to December 2018. We think total compensation is more important but we note that the CEO salary is lower, at US$971k. We note that more than half of the total compensation is not the salary; and performance requirements may apply to this non-salary portion. When we examined a selection of companies with market caps ranging from US$100m to US$400m, we found the median CEO total compensation was US$1.1m.
As you can see, Daniel Knotts is paid more than the median CEO pay at companies of a similar size, in the same market. However, this does not necessarily mean R.R. Donnelley & Sons Company is paying too much. We can better assess whether the pay is overly generous by looking into the underlying business performance.
You can see, below, how CEO compensation at R.R. Donnelley & Sons has changed over time.
Is R.R. Donnelley & Sons Company Growing?
On average over the last three years, R.R. Donnelley & Sons Company has grown earnings per share (EPS) by 90% each year (using a line of best fit). In the last year, its revenue is down 7.9%.
This demonstrates that the company has been improving recently. A good result. The lack of revenue growth isn't ideal, but it is the bottom line that counts most in business. You might want to check this free visual report on analyst forecasts for future earnings.
Has R.R. Donnelley & Sons Company Been A Good Investment?
With a three year total loss of 74%, R.R. Donnelley & Sons Company would certainly have some dissatisfied shareholders. This suggests it would be unwise for the company to pay the CEO too generously.
We compared the total CEO remuneration paid by R.R. Donnelley & Sons Company, and compared it to remuneration at a group of similar sized companies. We found that it pays well over the median amount paid in the benchmark group.
Importantly, though, the company has impressed with its earnings per share growth, over three years. On the other hand returns to investors over the same period have probably disappointed many. One might thus conclude that it would be better if the company waited until growth is reflected in the share price, before increasing CEO compensation. Shareholders may want to check for free if R.R. Donnelley & Sons insiders are buying or selling shares.
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.
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 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. Thank you for reading.