Should You Worry About Rent.com.au Limited's (ASX:RNT) CEO Salary Level?
In 2016 Greg Bader was appointed CEO of Rent.com.au Limited (ASX:RNT). 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. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. This process should give us an idea about how appropriately the CEO is paid.
Check out our latest analysis for Rent.com.au
How Does Greg Bader's Compensation Compare With Similar Sized Companies?
At the time of writing, our data says that Rent.com.au Limited has a market cap of AU$16m, and reported total annual CEO compensation of AU$244k for the year to June 2019. That's less than last year. While we always look at total compensation first, we note that the salary component is less, at AU$220k. We took a group of companies with market capitalizations below AU$291m, and calculated the median CEO total compensation to be AU$381k.
This would give shareholders a good impression of the company, since most similar size companies have to pay more, leaving less for shareholders. However, before we heap on the praise, we should delve deeper to understand business performance.
You can see, below, how CEO compensation at Rent.com.au has changed over time.
Is Rent.com.au Limited Growing?
On average over the last three years, Rent.com.au Limited has grown earnings per share (EPS) by 88% each year (using a line of best fit). It saw its revenue drop 6.9% over the last year.
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. Although we don't have analyst forecasts you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.
Has Rent.com.au Limited Been A Good Investment?
Given the total loss of 47% over three years, many shareholders in Rent.com.au Limited 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...
Rent.com.au Limited is currently paying its CEO below what is normal for companies of its size.
Since the business is growing, many would argue this suggests the pay is modest. Despite some positives, it is likely that shareholders wanted better returns, given the performance over the last three years. So while we would not say that Greg Bader is generously paid, it would be good to see an improvement in business performance before too an increase in pay. This sort of circumstance certainly justifies further research, because the investment returns might still come in the future. Whatever your view on compensation, you might want to check if insiders are buying or selling Rent.com.au shares (free trial).
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.
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.
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