Does Red Rock Resorts, Inc.'s (NASDAQ:RRR) CEO Pay Reflect Performance?

January 08, 2020

In 2015 Frank Fertitta was appointed CEO of Red Rock Resorts, Inc. (NASDAQ:RRR). This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. Then we'll look at a snap shot of the business growth. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This process should give us an idea about how appropriately the CEO is paid.

View our latest analysis for Red Rock Resorts

How Does Frank Fertitta's Compensation Compare With Similar Sized Companies?

At the time of writing, our data says that Red Rock Resorts, Inc. has a market cap of US$2.8b, and reported total annual CEO compensation of US$2.0m for 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. We examined companies with market caps from US$2.0b to US$6.4b, and discovered that the median CEO total compensation of that group was US$5.1m.

A first glance this seems like a real positive for shareholders, since Frank Fertitta is paid less than the average total compensation paid by similar sized companies. Though positive, it's important we delve into the performance of the actual business.

You can see a visual representation of the CEO compensation at Red Rock Resorts, below.

NasdaqGS:RRR CEO Compensation, January 8th 2020

Is Red Rock Resorts, Inc. Growing?

Red Rock Resorts, Inc. has increased its earnings per share (EPS) by an average of 13% a year, over the last three years (using a line of best fit). Its revenue is up 11% over last year.

This demonstrates that the company has been improving recently. A good result. It's a real positive to see this sort of growth in a single year. That suggests a healthy and growing business. You might want to check this free visual report on analyst forecasts for future earnings.

Has Red Rock Resorts, Inc. Been A Good Investment?

Red Rock Resorts, Inc. has not done too badly by shareholders, with a total return of 4.0%, over three years. 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...

Red Rock Resorts, Inc. is currently paying its CEO below what is normal for companies of its size.

Considering the underlying business is growing earnings, this would suggest the pay is modest. While some might be keen on seeing higher returns, our short analysis has not produced any evidence to suggest Frank Fertitta is overcompensated. It's great to see a company that pays its CEO reasonably, even while growing. It would be an additional positive if insiders are buying shares. So you may want to check if insiders are buying Red Rock Resorts shares with their own money (free access).

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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