Yanbin Wang has been the CEO of Rectifier Technologies Limited (ASX:RFT) since 2010, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.
Check out our latest analysis for Rectifier Technologies
Comparing Rectifier Technologies Limited's CEO Compensation With the industry
At the time of writing, our data shows that Rectifier Technologies Limited has a market capitalization of AU$54m, and reported total annual CEO compensation of AU$426k for the year to June 2020. That's a notable increase of 16% on last year. We note that the salary portion, which stands at AU$353.2k constitutes the majority of total compensation received by the CEO.
On comparing similar-sized companies in the industry with market capitalizations below AU$264m, we found that the median total CEO compensation was AU$179k. Hence, we can conclude that Yanbin Wang is remunerated higher than the industry median. What's more, Yanbin Wang holds AU$1.2m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.
| Component | 2020 | 2019 | Proportion (2020) |
| Salary | AU$353k | AU$304k | 83% |
| Other | AU$73k | AU$63k | 17% |
| Total Compensation | AU$426k | AU$367k | 100% |
On an industry level, roughly 71% of total compensation represents salary and 29% is other remuneration. It's interesting to note that Rectifier Technologies pays out a greater portion of remuneration through salary, compared to the industry. 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.
A Look at Rectifier Technologies Limited's Growth Numbers
Rectifier Technologies Limited's earnings per share (EPS) grew 62% per year over the last three years. In the last year, its revenue is down 12%.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's always a tough situation when revenues are not growing, but ultimately profits are more important. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.
Has Rectifier Technologies Limited Been A Good Investment?
We think that the total shareholder return of 60%, over three years, would leave most Rectifier Technologies Limited shareholders smiling. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.
In Summary...
As we noted earlier, Rectifier Technologies pays its CEO higher than the norm for similar-sized companies belonging to the same industry. But EPS growth and shareholder returns have been top-notch for the past three years. As a result of the excellent all-round performance of the company, we believe CEO compensation is fair. Given the strong history of shareholder returns, the shareholders are probably very happy with Yanbin's performance.
CEO compensation can have a massive impact on performance, but it's just one element. We've identified 2 warning signs for Rectifier Technologies that investors should be aware of in a dynamic business environment.
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.
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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. 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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About ASX:RFT
Rectifier Technologies
Designs and manufactures power rectifiers in Australia, Asia, North America, South America, Europe, and Oceania.
Flawless balance sheet and good value.
