We Think Some Shareholders May Hesitate To Increase Rotork plc's (LON:ROR) CEO Compensation

CEO Kevin Hostetler has done a decent job of delivering relatively good performance at Rotork plc (LON:ROR) recently. In light of this performance, CEO compensation will probably not be the main focus for shareholders as they go into the AGM on 30 April 2021. However, some shareholders will still be cautious of paying the CEO excessively.

View our latest analysis for Rotork

How Does Total Compensation For Kevin Hostetler Compare With Other Companies In The Industry?

According to our data, Rotork plc has a market capitalization of UK£3.1b, and paid its CEO total annual compensation worth UK£2.2m over the year to December 2020. We note that's an increase of 55% above last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at UK£608k.

In comparison with other companies in the industry with market capitalizations ranging from UK£1.4b to UK£4.6b, the reported median CEO total compensation was UK£1.6m. This suggests that Kevin Hostetler is paid more than the median for the industry. What's more, Kevin Hostetler holds UK£1.0m worth of shares in the company in their own name.

Component	2020	2019	Proportion (2020)
Salary	UK£608k	UK£604k	28%
Other	UK£1.6m	UK£818k	72%
Total Compensation	UK£2.2m	UK£1.4m	100%

On an industry level, around 76% of total compensation represents salary and 24% is other remuneration. Rotork sets aside a smaller share of compensation for salary, in comparison to the overall industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

A Look at Rotork plc's Growth Numbers

Rotork plc has seen its earnings per share (EPS) increase by 19% a year over the past three years. Its revenue is down 9.7% over the previous 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. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.

Has Rotork plc Been A Good Investment?

Rotork plc has served shareholders reasonably well, with a total return of 16% over three years. But they probably don't want to see the CEO paid more than is normal for companies around the same size.

In Summary...

The company's decent performance might have made most shareholders happy, possibly making CEO remuneration the least of the concerns to be discussed in the upcoming AGM. However, any decision to raise CEO pay might be met with some objections from the shareholders given that the CEO is already paid higher than the industry average.

CEO compensation can have a massive impact on performance, but it's just one element. We did our research and spotted 1 warning sign for Rotork that investors should look into moving forward.

Important note: Rotork is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE 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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