Here's Why Shareholders May Want To Be Cautious With Increasing Rectifier Technologies Limited's (ASX:RFT) CEO Pay Packet

Key Insights

• Rectifier Technologies to hold its Annual General Meeting on 29th of November
• CEO Yanbin Wang's total compensation includes salary of AU$373.5k
• The overall pay is 32% above the industry average
• Rectifier Technologies' EPS grew by 52% over the past three years while total shareholder loss over the past three years was 17%

Shareholders of Rectifier Technologies Limited (ASX:RFT) will have been dismayed by the negative share price return over the last three years. However, what is unusual is that EPS growth has been positive, suggesting that the share price has diverged from fundamentals. These are some of the concerns that shareholders may want to bring up at the next AGM held on 29th of November. They could also influence management through voting on resolutions such as executive remuneration. We think shareholders might be reluctant to increase compensation for the CEO at the moment, according to our analysis below.

View our latest analysis for Rectifier Technologies

How Does Total Compensation For Yanbin Wang Compare With Other Companies In The Industry?

At the time of writing, our data shows that Rectifier Technologies Limited has a market capitalization of AU$47m, and reported total annual CEO compensation of AU$507k for the year to June 2023. That's a notable increase of 24% on last year. Notably, the salary which is AU$373.5k, represents most of the total compensation being paid.

On comparing similar-sized companies in the Australia Electrical industry with market capitalizations below AU$305m, we found that the median total CEO compensation was AU$384k. Hence, we can conclude that Yanbin Wang is remunerated higher than the industry median. Moreover, Yanbin Wang also holds AU$1.0m worth of Rectifier Technologies stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component	2023	2022	Proportion (2023)
Salary	AU$374k	AU$321k	74%
Other	AU$133k	AU$87k	26%
Total Compensation	AU$507k	AU$407k	100%

On an industry level, roughly 72% of total compensation represents salary and 28% is other remuneration. Our data reveals that Rectifier Technologies allocates salary more or less in line with the wider market. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.

Rectifier Technologies Limited's Growth

Rectifier Technologies Limited has seen its earnings per share (EPS) increase by 52% a year over the past three years. Its revenue is up 167% over the last year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. The combination of strong revenue growth with medium-term EPS improvement certainly points to the kind of growth we like to see. While we don't have analyst forecasts for the company, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.

Has Rectifier Technologies Limited Been A Good Investment?

Given the total shareholder loss of 17% over three years, many shareholders in Rectifier Technologies Limited are probably rather dissatisfied, to say the least. So shareholders would probably want the company to be less generous with CEO compensation.

To Conclude...

Shareholders have not seen their shares grow in value, rather they have seen their shares decline. The fact that the stock price hasn't grown along with earnings may indicate that other issues may be affecting that stock. 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 pay is simply one of the many factors that need to be considered while examining business performance. We identified 2 warning signs for Rectifier Technologies (1 shouldn't be ignored!) that you should be aware of before investing here.

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.