This article will reflect on the compensation paid to Rob Gordon who has served as CEO of Ricegrowers Limited (ASX:SGLLV) since 2012. 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 Ricegrowers
How Does Total Compensation For Rob Gordon Compare With Other Companies In The Industry?
At the time of writing, our data shows that Ricegrowers Limited has a market capitalization of AU$361m, and reported total annual CEO compensation of AU$3.3m for the year to April 2020. Notably, that's an increase of 17% over the year before. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at AU$1.4m.
On examining similar-sized companies in the industry with market capitalizations between AU$134m and AU$537m, we discovered that the median CEO total compensation of that group was AU$696k. This suggests that Rob Gordon is paid more than the median for the industry. Furthermore, Rob Gordon directly owns AU$732k worth of shares in the company.
| Component | 2020 | 2019 | Proportion (2020) |
| Salary | AU$1.4m | AU$1.3m | 41% |
| Other | AU$2.0m | AU$1.5m | 59% |
| Total Compensation | AU$3.3m | AU$2.9m | 100% |
On an industry level, around 80% of total compensation represents salary and 20% is other remuneration. In Ricegrowers' case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.
Ricegrowers Limited's Growth
Over the last three years, Ricegrowers Limited has shrunk its earnings per share by 9.3% per year. Its revenue is down 4.9% over the previous year.
Overall this is not a very positive result for shareholders. And the impression is worse when you consider revenue is down year-on-year. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..
Has Ricegrowers Limited Been A Good Investment?
Boasting a total shareholder return of 84% over three years, Ricegrowers Limited has done well by shareholders. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.
To Conclude...
As previously discussed, Rob is compensated more than what is normal for CEOs of companies of similar size, and which belong to the same industry. We're not seeing great strides in EPS, but the company has clearly pleased some investors, given the returns over the last three years. So while we would not say that Rob is generously paid, stockholders would want to see some EPS growth before agreeing that a raise is a good idea.
While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. That's why we did some digging and identified 1 warning sign for Ricegrowers that you should be aware of before investing.
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:SGLLV
Ricegrowers
Operates as a rice food company in Australia, New Zealand, the Pacific Islands, the Middle East, the United States, and internationally.
Undervalued with excellent balance sheet.
