Heath Sharp became the CEO of Reliance Worldwide Corporation Limited (ASX:RWC) in 2015. 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. Third, we’ll reflect on the total return to shareholders over three years, as a second measure of business performance. This method should give us information to assess how appropriately the company pays the CEO.
How Does Heath Sharp’s Compensation Compare With Similar Sized Companies?
At the time of writing, our data says that Reliance Worldwide Corporation Limited has a market cap of AU$3.3b, and reported total annual CEO compensation of AU$3.0m for the year to June 2019. That’s a modest increase of 3.4% on the prior year year. While this analysis focuses on total compensation, it’s worth noting the salary is lower, valued at AU$1.8m. We examined companies with market caps from AU$1.5b to AU$4.7b, and discovered that the median CEO total compensation of that group was AU$2.1m.
As you can see, Heath Sharp is paid more than the median CEO pay at companies of a similar size, in the same market. However, this does not necessarily mean Reliance Worldwide Corporation Limited is paying too much. We can better assess whether the pay is overly generous by looking into the underlying business performance.
You can see a visual representation of the CEO compensation at Reliance Worldwide, below.
Is Reliance Worldwide Corporation Limited Growing?
Reliance Worldwide Corporation Limited has increased its earnings per share (EPS) by an average of 55% a year, over the last three years (using a line of best fit). Its revenue is up 43% over last year.
This demonstrates that the company has been improving recently. A good result. The combination of strong revenue growth with medium-term earnings per share improvement certainly points to the kind of growth I like to see. Shareholders might be interested in this free visualization of analyst forecasts.
Has Reliance Worldwide Corporation Limited Been A Good Investment?
Most shareholders would probably be pleased with Reliance Worldwide Corporation Limited for providing a total return of 45% over three years. 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.
We compared the total CEO remuneration paid by Reliance Worldwide Corporation Limited, and compared it to remuneration at a group of similar sized companies. Our data suggests that it pays above the median CEO pay within that group.
However, the earnings per share growth over three years is certainly impressive. On top of that, in the same period, returns to shareholders have been great. Considering this fine result for shareholders, we daresay the CEO compensation might be apt. Whatever your view on compensation, you might want to check if insiders are buying or selling Reliance Worldwide shares (free trial).
If you want to buy a stock that is better than Reliance Worldwide, this free list of high return, low debt companies is a great place to look.
If you spot an error that warrants correction, please contact the editor at email@example.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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