Most Shareholders Will Probably Find That The CEO Compensation For Reko International Group Inc. (CVE:REKO) Is Reasonable

By
Simply Wall St
Published
November 25, 2021
TSXV:REKO
Source: Shutterstock

Reko International Group Inc. (CVE:REKO) has exhibited strong share price growth in the past few years. However, its earnings growth has not kept up, suggesting that there may be something amiss. The upcoming AGM on 02 December 2021 may be an opportunity for shareholders to bring up any concerns they may have for the board’s attention. It would also be an opportunity for them to influence management through exercising their voting power on company resolutions, including CEO and executive remuneration, which could impact on firm performance in the future. From what we gathered, we think shareholders should be wary of raising CEO compensation until the company shows some marked improvement.

Check out our latest analysis for Reko International Group

How Does Total Compensation For Diane Reko Compare With Other Companies In The Industry?

Our data indicates that Reko International Group Inc. has a market capitalization of CA$30m, and total annual CEO compensation was reported as CA$237k for the year to July 2021. That is, the compensation was roughly the same as last year. In particular, the salary of CA$225.0k, makes up a huge portion of the total compensation being paid to the CEO.

For comparison, other companies in the industry with market capitalizations below CA$253m, reported a median total CEO compensation of CA$243k. This suggests that Reko International Group remunerates its CEO largely in line with the industry average. Moreover, Diane Reko also holds CA$18m worth of Reko International Group stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component20212020Proportion (2021)
Salary CA$225k CA$229k 95%
Other CA$12k CA$9.4k 5%
Total CompensationCA$237k CA$239k100%

Talking in terms of the industry, salary represented approximately 72% of total compensation out of all the companies we analyzed, while other remuneration made up 28% of the pie. Reko International Group is paying a higher share of its remuneration through a salary in comparison to the overall industry. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

ceo-compensation
TSXV:REKO CEO Compensation November 25th 2021

Reko International Group Inc.'s Growth

Over the last three years, Reko International Group Inc. has shrunk its earnings per share by 23% per year. It saw its revenue drop 2.6% over the last year.

Overall this is not a very positive result for shareholders. 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. While we don't have analyst forecasts for the company, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.

Has Reko International Group Inc. Been A Good Investment?

Boasting a total shareholder return of 75% over three years, Reko International Group Inc. has done well by shareholders. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.

In Summary...

Although shareholders would be quite happy with the returns they have earned on their initial investment, earnings have failed to grow and this could mean returns may be hard to keep up. Shareholders should make the most of the coming opportunity to question the board on key concerns they may have and revisit their investment thesis with regards to the company.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. We did our research and identified 3 warning signs (and 1 which makes us a bit uncomfortable) in Reko International Group we think you should know about.

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.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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Simply Wall St

Simply Wall St is focused on providing unbiased, high-quality research coverage on every listed company in the world. Our research team consists of data scientists and multiple equity analysts with over two decades worth of financial markets experience between them.