Here's Why Shareholders May Want To Be Cautious With Increasing Rio Tinto Group's (LON:RIO) CEO Pay Packet

Key Insights

• Rio Tinto Group's Annual General Meeting to take place on 2nd of May
• Salary of US$1.53m is part of CEO Jakob Stausholm's total remuneration
• The overall pay is 32% above the industry average
• Over the past three years, Rio Tinto Group's EPS grew by 0.9% and over the past three years, the total shareholder return was 15%

CEO Jakob Stausholm has done a decent job of delivering relatively good performance at Rio Tinto Group (LON:RIO) recently. As shareholders go into the upcoming AGM on 2nd of May, CEO compensation will probably not be their focus, but rather the steps management will take to continue the growth momentum. However, some shareholders may still be hesitant of being overly generous with CEO compensation.

See our latest analysis for Rio Tinto Group

How Does Total Compensation For Jakob Stausholm Compare With Other Companies In The Industry?

Our data indicates that Rio Tinto Group has a market capitalization of UK£92b, and total annual CEO compensation was reported as US$6.1m for the year to December 2023. That's a notable increase of 16% on last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$1.5m.

On comparing similar companies in the British Metals and Mining industry with market capitalizations above UK£6.4b, we found that the median total CEO compensation was US$4.6m. Hence, we can conclude that Jakob Stausholm is remunerated higher than the industry median. Moreover, Jakob Stausholm also holds UK£9.6m worth of Rio Tinto Group stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component	2023	2022	Proportion (2023)
Salary	US$1.5m	US$1.5m	25%
Other	US$4.5m	US$3.8m	75%
Total Compensation	US$6.1m	US$5.2m	100%

Speaking on an industry level, nearly 66% of total compensation represents salary, while the remainder of 34% is other remuneration. Rio Tinto Group sets aside a smaller share of compensation for salary, in comparison to the overall industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

A Look at Rio Tinto Group's Growth Numbers

Rio Tinto Group saw earnings per share stay pretty flat over the last three years. Its revenue is down 2.7% over the previous year.

We would prefer it if there was revenue growth, but the modest improvement in EPS is good. In conclusion we can't form a strong opinion about business performance yet; but it's one worth watching. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Rio Tinto Group Been A Good Investment?

Rio Tinto Group has generated a total shareholder return of 15% over three years, so most shareholders would be reasonably content. But they would probably prefer not to see CEO compensation far in excess of the median.

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, if the board proposes to increase the compensation, some shareholders might have questions given that the CEO is already being paid higher than the industry.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. We did our research and spotted 2 warning signs for Rio Tinto Group that investors should look into moving forward.

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. 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.