Most Shareholders Will Probably Find That The Compensation For Rightmove plc's (LON:RMV) CEO Is Reasonable

The performance at Rightmove plc (LON:RMV) has been rather lacklustre of late and shareholders may be wondering what CEO Peter Brooks-Johnson is planning to do about this. They will get a chance to exercise their voting power to influence the future direction of the company in the next AGM on 07 May 2021. Setting appropriate executive remuneration to align with the interests of shareholders may also be a way to influence the company performance in the long run. We have prepared some analysis below to show that CEO compensation looks to be reasonable.

See our latest analysis for Rightmove

Comparing Rightmove plc's CEO Compensation With the industry

At the time of writing, our data shows that Rightmove plc has a market capitalization of UK£5.3b, and reported total annual CEO compensation of UK£1.0m for the year to December 2020. That's a notable decrease of 53% on last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at UK£478k.

In comparison with other companies in the industry with market capitalizations ranging from UK£2.9b to UK£8.6b, the reported median CEO total compensation was UK£2.2m. Accordingly, Rightmove pays its CEO under the industry median. What's more, Peter Brooks-Johnson holds UK£12m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

On an industry level, around 47% of total compensation represents salary and 53% is other remuneration. Rightmove is largely mirroring the industry average when it comes to the share a salary enjoys in overall compensation. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

Rightmove plc's Growth

Over the last three years, Rightmove plc has shrunk its earnings per share by 7.0% per year. It saw its revenue drop 29% over the last year.

Overall this is not a very positive result for shareholders. And the impression is worse when you consider revenue is down year-on-year. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Rightmove plc Been A Good Investment?

We think that the total shareholder return of 38%, over three years, would leave most Rightmove plc shareholders smiling. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.

To Conclude...

Although shareholders would be quite happy with the returns they have earned on their initial investment, earnings have failed to grow and this could mean these strong returns may not continue. These concerns could be addressed to the board and shareholders should revisit their investment thesis to see if it still makes sense.

CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. That's why we did some digging and identified 1 warning sign for Rightmove that investors should think about before committing capital to this 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. 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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