Mark Talbot has been the CEO of Redflex Holdings Limited (ASX:RDF) since 2017, 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.
Comparing Redflex Holdings Limited's CEO Compensation With the industry
Our data indicates that Redflex Holdings Limited has a market capitalization of AU$59m, and total annual CEO compensation was reported as AU$1.4m for the year to June 2020. We note that's a small decrease of 3.7% on last year. While we always look at total compensation first, our analysis shows that the salary component is less, at AU$597k.
For comparison, other companies in the industry with market capitalizations below AU$264m, reported a median total CEO compensation of AU$378k. This suggests that Mark Talbot is paid more than the median for the industry. Moreover, Mark Talbot also holds AU$410k worth of Redflex Holdings stock directly under their own name.
On an industry level, roughly 57% of total compensation represents salary and 43% is other remuneration. Redflex Holdings pays a modest slice of remuneration through salary, as compared to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.
A Look at Redflex Holdings Limited's Growth Numbers
Over the past three years, Redflex Holdings Limited has seen its earnings per share (EPS) grow by 62% per year. It saw its revenue drop 14% over the last year.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. The lack of revenue growth isn't ideal, but it is the bottom line that counts most in business. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.
Has Redflex Holdings Limited Been A Good Investment?
With a three year total loss of 34% for the shareholders, Redflex Holdings Limited would certainly have some dissatisfied shareholders. Therefore, it might be upsetting for shareholders if the CEO were paid generously.
As we touched on above, Redflex Holdings Limited is currently paying its CEO higher than the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. However, the EPS growth is certainly impressive, but shareholder returns — over the same period — have been disappointing. Although we'd stop short of calling it inappropriate, we think Mark is earning a very handsome sum.
While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. We've identified 1 warning sign for Redflex Holdings 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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