Key Things To Understand About Ramsdens Holdings' (LON:RFX) CEO Pay Cheque

Peter Kenyon has been the CEO of Ramsdens Holdings PLC (LON:RFX) since 2008, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Ramsdens Holdings.

View our latest analysis for Ramsdens Holdings

Comparing Ramsdens Holdings PLC's CEO Compensation With the industry

At the time of writing, our data shows that Ramsdens Holdings PLC has a market capitalization of UK£42m, and reported total annual CEO compensation of UK£377k for the year to September 2020. We note that's an increase of 23% above last year. In particular, the salary of UK£301.2k, makes up a huge portion of the total compensation being paid to the CEO.

In comparison with other companies in the industry with market capitalizations under UK£150m, the reported median total CEO compensation was UK£427k. So it looks like Ramsdens Holdings compensates Peter Kenyon in line with the median for the industry. Furthermore, Peter Kenyon directly owns UK£1.5m worth of shares in the company, implying that they are deeply invested in the company's success.

Speaking on an industry level, nearly 80% of total compensation represents salary, while the remainder of 20% is other remuneration. Our data reveals that Ramsdens Holdings allocates salary more or less in line with the wider market. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

Ramsdens Holdings PLC's Growth

Ramsdens Holdings PLC's earnings per share (EPS) grew 6.7% per year over the last three years. In the last year, its revenue is down 5.4%.

We would prefer it if there was revenue growth, but the modest EPSgrowth gives us some relief. These two metrics are moving in different directions, so while it's hard to be confident judging performance, we think the stock is worth watching. 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 Ramsdens Holdings PLC Been A Good Investment?

With a three year total loss of 19% for the shareholders, Ramsdens Holdings PLC would certainly have some dissatisfied shareholders. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

As we noted earlier, Ramsdens Holdings pays its CEO in line with similar-sized companies belonging to the same industry. Meanwhile, Ramsdens Holdings is suffering from adverse shareholder returns and althoughEPS have grown over the past three years, they have not been extraordinary. Although we wouldn't say CEO compensation is exceptionally high, it isn't very low either. Shareholders might want to see substantial improvements in returns before agreeing that Peter deserves a raise.

CEO pay is simply one of the many factors that need to be considered while examining business performance. In our study, we found 2 warning signs for Ramsdens Holdings you should be aware of, and 1 of them can't be ignored.

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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