Want to participate in a short research study? Help shape the future of investing tools and you could win a $250 gift card!
The CEO of Reckon Limited (ASX:RKN) is Sam Allert. First, this article will compare CEO compensation with compensation at similar sized companies. Then we’ll look at a snap shot of the business growth. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This method should give us information to assess how appropriately the company pays the CEO.
How Does Sam Allert’s Compensation Compare With Similar Sized Companies?
At the time of writing our data says that Reckon Limited has a market cap of AU$64m, and is paying total annual CEO compensation of AU$723k. (This number is for the twelve months until December 2018). We note that’s an increase of 8.8% above last year. While this analysis focuses on total compensation, it’s worth noting the salary is lower, valued at AU$504k. We examined a group of similar sized companies, with market capitalizations of below AU$287m. The median CEO total compensation in that group is AU$358k.
It would therefore appear that Reckon Limited pays Sam Allert more than the median CEO remuneration at companies of a similar size, in the same market. However, this fact alone doesn’t mean the remuneration is too high. A closer look at the performance of the underlying business will give us a better idea about whether the pay is particularly generous.
The graphic below shows how CEO compensation at Reckon has changed from year to year.
Is Reckon Limited Growing?
Reckon Limited has reduced its earnings per share by an average of 39% a year, over the last three years (measured with a line of best fit). Its revenue is down -6.1% over last year.
Sadly for shareholders, earnings per share are actually down, over three years. And the fact that revenue is down year on year arguably paints an ugly picture. It’s hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Shareholders might be interested in this free visualization of analyst forecasts.
Has Reckon Limited Been A Good Investment?
Since shareholders would have lost about 57% over three years, some Reckon Limited shareholders would surely be feeling negative emotions. So shareholders would probably think the company shouldn’t be too generous with CEO compensation.
We examined the amount Reckon Limited pays its CEO, and compared it to the amount paid by similar sized companies. We found that it pays well over the median amount paid in the benchmark group.Earnings per share have not grown in three years, and the revenue growth fails to impress us.
Arguably worse, investors are without a positive return for the last three years. This contrasts with the growth in CEO remuneration, year on year. Some might well form the view that the CEO is paid too generously! Shareholders may want to check for free if Reckon insiders are buying or selling shares.
Important note: Reckon may not be the best stock to buy. You might find something better in this list of interesting companies with high ROE and low debt.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
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. Thank you for reading.