Yahoo Finance Shareholders May Find It Hard To Justify Increasing Reliance Worldwide Corporation Limited's (ASX:RWC) CEO Compensation For Now
As many shareholders of Reliance Worldwide Corporation Limited (ASX:RWC) will be aware, they have not made a gain on their investment in the past three years. Despite positive EPS growth in the past few years, the share price hasn't tracked the fundamental performance of the company. These are some of the concerns that shareholders may want to bring up at the next AGM held on 26 October 2022. They could also try to influence management and firm direction through voting on resolutions such as executive remuneration and other company matters. We discuss below why we think shareholders should be cautious of approving a raise for the CEO at the moment.
Check out our latest analysis for Reliance Worldwide
How Does Total Compensation For Heath Sharp Compare With Other Companies In The Industry?
According to our data, Reliance Worldwide Corporation Limited has a market capitalization of AU$2.7b, and paid its CEO total annual compensation worth US$3.2m over the year to June 2022. That's a notable decrease of 14% on last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$1.3m.
On comparing similar companies from the same industry with market caps ranging from AU$1.6b to AU$5.1b, we found that the median CEO total compensation was US$3.2m. This suggests that Reliance Worldwide remunerates its CEO largely in line with the industry average. What's more, Heath Sharp holds AU$4.3m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.
Component | 2022 | 2021 | Proportion (2022) |
Salary | US$1.3m | US$1.3m | 40% |
Other | US$1.9m | US$2.3m | 60% |
Total Compensation | US$3.2m | US$3.7m | 100% |
On an industry level, around 57% of total compensation represents salary and 43% is other remuneration. It's interesting to note that Reliance Worldwide allocates a smaller portion of compensation to salary in comparison to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.
Reliance Worldwide Corporation Limited's Growth
Reliance Worldwide Corporation Limited has seen its earnings per share (EPS) increase by 14% a year over the past three years. Its revenue is up 17% over the last year.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's also good to see decent revenue growth in the last year, suggesting the business is healthy and growing. 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 Reliance Worldwide Corporation Limited Been A Good Investment?
Since shareholders would have lost about 10% over three years, some Reliance Worldwide Corporation Limited investors would surely be feeling negative emotions. Therefore, it might be upsetting for shareholders if the CEO were paid generously.
To Conclude...
The fact that shareholders are sitting on a loss on the value of their shares in the past few years is certainly disconcerting. The stock's movement is disjointed with the company's earnings growth, which ideally should move in the same direction. If there are some unknown variables that are influencing the stock's price, surely shareholders would have some concerns. The upcoming AGM will be a chance for shareholders to question the board on key matters, such as CEO remuneration or any other issues they might have and revisit their investment thesis with regards to the company.
CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. In our study, we found 2 warning signs for Reliance Worldwide you should be aware of, and 1 of them is a bit unpleasant.
Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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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