Stock Analysis

Redcentric plc's (LON:RCN) CEO Compensation Is Looking A Bit Stretched At The Moment

  •  Updated
Source: Shutterstock

CEO Peter Brotherton has done a decent job of delivering relatively good performance at Redcentric plc (LON:RCN) recently. As shareholders go into the upcoming AGM on 09 September 2021, CEO compensation will probably not be their focus, but rather the steps management will take to continue the growth momentum. However, some shareholders will still be cautious of paying the CEO excessively.

View our latest analysis for Redcentric

How Does Total Compensation For Peter Brotherton Compare With Other Companies In The Industry?

According to our data, Redcentric plc has a market capitalization of UK£211m, and paid its CEO total annual compensation worth UK£672k over the year to March 2021. That's a notable increase of 27% on last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at UK£300k.

On examining similar-sized companies in the industry with market capitalizations between UK£72m and UK£289m, we discovered that the median CEO total compensation of that group was UK£426k. Accordingly, our analysis reveals that Redcentric plc pays Peter Brotherton north of the industry median. Moreover, Peter Brotherton also holds UK£309k worth of Redcentric stock directly under their own name.

Component20212020Proportion (2021)
Salary UK£300k UK£307k 45%
Other UK£372k UK£222k 55%
Total CompensationUK£672k UK£529k100%

Speaking on an industry level, nearly 60% of total compensation represents salary, while the remainder of 40% is other remuneration. In Redcentric's case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

AIM:RCN CEO Compensation September 3rd 2021

Redcentric plc's Growth

Redcentric plc's earnings per share (EPS) grew 160% per year over the last three years. It achieved revenue growth of 4.5% over the last year.

This demonstrates that the company has been improving recently and is good news for the shareholders. It's good to see a bit of revenue growth, as this suggests the business is able to grow sustainably. 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 Redcentric plc Been A Good Investment?

Boasting a total shareholder return of 60% over three years, Redcentric plc has done well by shareholders. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

To Conclude...

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.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. That's why we did our research, and identified 3 warning signs for Redcentric (of which 1 is concerning!) that you should know about in order to have a holistic understanding of the stock.

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.

If you’re looking to trade Redcentric, open an account with the lowest-cost* platform trusted by professionals, Interactive Brokers. Their clients from over 200 countries and territories trade stocks, options, futures, forex, bonds and funds worldwide from a single integrated account. Promoted

Valuation is complex, but we're helping make it simple.

Find out whether Redcentric is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

View the Free Analysis