Rob Purcell became the CEO of Renold plc (LON:RNO) in 2013, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Renold.
View our latest analysis for Renold
How Does Total Compensation For Rob Purcell Compare With Other Companies In The Industry?
According to our data, Renold plc has a market capitalization of UK£29m, and paid its CEO total annual compensation worth UK£378k over the year to March 2020. We note that's a decrease of 13% compared to last year. We note that the salary portion, which stands at UK£307.0k constitutes the majority of total compensation received by the CEO.
In comparison with other companies in the industry with market capitalizations under UK£146m, the reported median total CEO compensation was UK£333k. So it looks like Renold compensates Rob Purcell in line with the median for the industry. Moreover, Rob Purcell also holds UK£600k worth of Renold stock directly under their own name.
| Component | 2020 | 2019 | Proportion (2020) |
| Salary | UK£307k | UK£300k | 81% |
| Other | UK£71k | UK£134k | 19% |
| Total Compensation | UK£378k | UK£434k | 100% |
On an industry level, roughly 48% of total compensation represents salary and 52% is other remuneration. According to our research, Renold has allocated a higher percentage of pay to salary in comparison to the wider industry. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.
Renold plc's Growth
Over the last three years, Renold plc has shrunk its earnings per share by 12% per year. In the last year, its revenue is down 13%.
The decline in EPS is a bit concerning. This is compounded by the fact revenue is actually down on last year. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.
Has Renold plc Been A Good Investment?
Since shareholders would have lost about 74% over three years, some Renold plc investors would surely be feeling negative emotions. So shareholders would probably want the company to be lessto generous with CEO compensation.
In Summary...
As we touched on above, Renold plc is currently paying a compensation that's close to the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. On the other hand, EPS growth and total shareholder return have been negative for the last three years. It's tough to call out the compensation as inappropriate, but shareholders might not favor a raise before company performance improves.
We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. We did our research and identified 5 warning signs (and 1 which can't be ignored) in Renold we think you should know about.
Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.
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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 AIM:RNO
Renold
Engages in the manufacture and sale of high precision engineered products and solutions in the United Kingdom, rest of Europe, the United States, Canada, Australasia, China, India, and internationally.
Very undervalued with reasonable growth potential.
