A Quick Analysis On Real Estate Investors' (LON:RLE) CEO Compensation

By
Simply Wall St
Published
December 29, 2020

Paramjit Paul Bassi became the CEO of Real Estate Investors plc (LON:RLE) in 2006, 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 evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.

View our latest analysis for Real Estate Investors

How Does Total Compensation For Paramjit Paul Bassi Compare With Other Companies In The Industry?

According to our data, Real Estate Investors plc has a market capitalization of UK£61m, and paid its CEO total annual compensation worth UK£1.1m over the year to December 2019. We note that's a small decrease of 6.8% on last year. We think total compensation is more important but our data shows that the CEO salary is lower, at UK£550k.

For comparison, other companies in the industry with market capitalizations below UK£149m, reported a median total CEO compensation of UK£361k. This suggests that Paramjit Paul Bassi is paid more than the median for the industry. Furthermore, Paramjit Paul Bassi directly owns UK£4.1m worth of shares in the company, implying that they are deeply invested in the company's success.

Component20192018Proportion (2019)
Salary UK£550k UK£440k 49%
Other UK£570k UK£762k 51%
Total CompensationUK£1.1m UK£1.2m100%

Speaking on an industry level, nearly 54% of total compensation represents salary, while the remainder of 46% is other remuneration. Real Estate Investors is largely mirroring the industry average when it comes to the share a salary enjoys in overall compensation. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

AIM:RLE CEO Compensation December 29th 2020

A Look at Real Estate Investors plc's Growth Numbers

Over the last three years, Real Estate Investors plc has shrunk its earnings per share by 65% per year. Its revenue is up 2.8% over the last year.

The decline in EPS is a bit concerning. The modest increase in revenue in the last year isn't enough to make us overlook the disappointing change in EPS. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. 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 Real Estate Investors plc Been A Good Investment?

With a three year total loss of 29% for the shareholders, Real Estate Investors 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 previously discussed, Paramjit Paul is compensated more than what is normal for CEOs of companies of similar size, and which belong to the same industry. Unfortunately, this doesn't look great when you see shareholder returns have been negative over the last three years. To make matters worse, EPS growth has also been negative during this period. Understandably, the company's shareholders might have some questions about the CEO's remuneration, given the disappointing performance.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. That's why we did our research, and identified 4 warning signs for Real Estate Investors (of which 2 shouldn't be ignored!) that you should know about in order to have a holistic understanding of the stock.

Switching gears from Real Estate Investors, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.

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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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