Should Shareholders Reconsider RA International Group plc's (LON:RAI) CEO Compensation Package?

Key Insights

• RA International Group to hold its Annual General Meeting on 22nd of November
• Total pay for CEO Soraya Narfeldt includes US$411.0k salary
• The total compensation is similar to the average for the industry
• Over the past three years, RA International Group's EPS fell by 71% and over the past three years, the total loss to shareholders 77%

The results at RA International Group plc (LON:RAI) have been quite disappointing recently and CEO Soraya Narfeldt bears some responsibility for this. Shareholders can take the chance to hold the board and management accountable for the unsatisfactory performance at the next AGM on 22nd of November. They will also get a chance to influence managerial decision-making through voting on resolutions such as executive remuneration, which may impact firm value in the future. We present the case why we think CEO compensation is out of sync with company performance.

View our latest analysis for RA International Group

How Does Total Compensation For Soraya Narfeldt Compare With Other Companies In The Industry?

Our data indicates that RA International Group plc has a market capitalization of UK£17m, and total annual CEO compensation was reported as US$452k for the year to December 2022. That's a slight decrease of 4.2% on the prior year. Notably, the salary which is US$411.0k, represents most of the total compensation being paid.

For comparison, other companies in the British Construction industry with market capitalizations below UK£161m, reported a median total CEO compensation of US$517k. This suggests that RA International Group remunerates its CEO largely in line with the industry average. Moreover, Soraya Narfeldt also holds UK£9.3m worth of RA International Group stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component	2022	2021	Proportion (2022)
Salary	US$411k	US$408k	91%
Other	US$41k	US$64k	9%
Total Compensation	US$452k	US$472k	100%

On an industry level, around 37% of total compensation represents salary and 63% is other remuneration. RA International Group pays out 91% of remuneration in the form of a salary, significantly higher than the industry average. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

A Look at RA International Group plc's Growth Numbers

RA International Group plc has reduced its earnings per share by 71% a year over the last three years. Its revenue is up 11% over the last year.

The decline in EPS is a bit concerning. While the revenue growth is good to see, it is outweighed by the fact that EPS are down, over three years. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. We don't have analyst forecasts, but you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.

Has RA International Group plc Been A Good Investment?

Few RA International Group plc shareholders would feel satisfied with the return of -77% over three years. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

To Conclude...

Given that shareholders haven't seen any positive returns on their investment, not to mention the lack of earnings growth, this may suggest that few of them would be willing to award the CEO with a pay rise. At the upcoming AGM, management will get a chance to explain how they plan to get the business back on track and address the concerns from investors.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. That's why we did our research, and identified 3 warning signs for RA International Group (of which 2 are a bit concerning!) that you should know about in order to have a holistic understanding of the stock.

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. 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.