Tim Harris has been the CEO of RedFlow Limited (ASX:RFX) since 2018, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for RedFlow.
Comparing RedFlow Limited's CEO Compensation With the industry
According to our data, RedFlow Limited has a market capitalization of AU$31m, and paid its CEO total annual compensation worth AU$645k over the year to June 2020. That's a notable increase of 8.8% on last year. Notably, the salary which is AU$417.6k, represents most of the total compensation being paid.
In comparison with other companies in the industry with market capitalizations under AU$272m, the reported median total CEO compensation was AU$213k. Accordingly, our analysis reveals that RedFlow Limited pays Tim Harris north of the industry median. Moreover, Tim Harris also holds AU$69k worth of RedFlow stock directly under their own name.
On an industry level, around 70% of total compensation represents salary and 30% is other remuneration. RedFlow is largely mirroring the industry average when it comes to the share a salary enjoys in overall compensation. 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.
RedFlow Limited's Growth
RedFlow Limited's earnings per share (EPS) grew 34% per year over the last three years. In the last year, its revenue is up 151%.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's great to see that revenue growth is strong, too. These metrics suggest the business is growing strongly. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.
Has RedFlow Limited Been A Good Investment?
Given the total shareholder loss of 78% over three years, many shareholders in RedFlow Limited are probably rather dissatisfied, to say the least. This suggests it would be unwise for the company to pay the CEO too generously.
As previously discussed, Tim is compensated more than what is normal for CEOs of companies of similar size, and which belong to the same industry. However, we must not forget that the EPS growth has been very strong, but it's disappointing to see negative shareholder returns over the same period. Although we'd stop short of calling it inappropriate, we think Tim is earning a very handsome sum.
We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. That's why we did our research, and identified 5 warning signs for RedFlow (of which 1 is a bit concerning!) that you should know about in order to have a holistic understanding of the stock.
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 decide to trade RedFlow, use the lowest-cost* platform that is rated #1 Overall by Barron’s, Interactive Brokers. Trade stocks, options, futures, forex, bonds and funds on 135 markets, all from a single integrated account.
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.
*Interactive Brokers Rated Lowest Cost Broker by StockBrokers.com Annual Online Review 2020
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email firstname.lastname@example.org.