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Should You Worry About Ritchie Bros. Auctioneers Incorporated's (NYSE:RBA) CEO Salary Level?

Simply Wall St

Ravi Saligram has been the CEO of Ritchie Bros. Auctioneers Incorporated (NYSE:RBA) since 2014. 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.

See our latest analysis for Ritchie Bros. Auctioneers

How Does Ravi Saligram's Compensation Compare With Similar Sized Companies?

According to our data, Ritchie Bros. Auctioneers Incorporated has a market capitalization of US$3.9b, and pays its CEO total annual compensation worth US$5.0m. (This is based on the year to December 2018). We think total compensation is more important but we note that the CEO salary is lower, at US$1.0m. When we examined a selection of companies with market caps ranging from US$2.0b to US$6.4b, we found the median CEO total compensation was US$5.1m.

That means Ravi Saligram receives fairly typical remuneration for the CEO of a company that size. While this data point isn't particularly informative alone, it gains more meaning when considered with business performance.

The graphic below shows how CEO compensation at Ritchie Bros. Auctioneers has changed from year to year.

NYSE:RBA CEO Compensation, August 5th 2019

Is Ritchie Bros. Auctioneers Incorporated Growing?

On average over the last three years, Ritchie Bros. Auctioneers Incorporated has shrunk earnings per share by 1.5% each year (measured with a line of best fit). In the last year, its revenue is up 18%.

Unfortunately there is a complete lack of earnings per share improvement, over three years. While the revenue growth is good to see, it is outweighed by the fact that earnings per share are down, over three years. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. You might want to check this free visual report on analyst forecasts for future earnings.

Has Ritchie Bros. Auctioneers Incorporated Been A Good Investment?

With a total shareholder return of 15% over three years, Ritchie Bros. Auctioneers Incorporated 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...

Ravi Saligram is paid around the same as most CEOs of similar size companies.

We're not seeing great strides in earnings per share, and total returns were decent but not amazing in the last three years. We do not think the CEO pay is a problem, but it's probably fair to say that many shareholders would like to see improved performance, before any pay rise occurs. Shareholders may want to check for free if Ritchie Bros. Auctioneers 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 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.