Shareholders May Find It Hard To Justify Increasing Rosslyn Data Technologies plc's (LON:RDT) CEO Compensation For Now

Key Insights

• Rosslyn Data Technologies' Annual General Meeting to take place on 3rd of December
• CEO Paul Watts' total compensation includes salary of UK£220.0k
• The total compensation is similar to the average for the industry
• Over the past three years, Rosslyn Data Technologies' EPS grew by 20% and over the past three years, the total loss to shareholders 98%

The underwhelming share price performance of Rosslyn Data Technologies plc (LON:RDT) in the past three years would have disappointed many shareholders. However, what is unusual is that EPS growth has been positive, suggesting that the share price has diverged from fundamentals. These are some of the concerns that shareholders may want to bring up at the next AGM held on 3rd of December. They could also influence management through voting on resolutions such as executive remuneration. We discuss below why we think shareholders should be cautious of approving a raise for the CEO at the moment.

Check out our latest analysis for Rosslyn Data Technologies

Comparing Rosslyn Data Technologies plc's CEO Compensation With The Industry

At the time of writing, our data shows that Rosslyn Data Technologies plc has a market capitalization of UK£3.3m, and reported total annual CEO compensation of UK£280k for the year to April 2024. Notably, that's an increase of 41% over the year before. In particular, the salary of UK£220.0k, makes up a huge portion of the total compensation being paid to the CEO.

On comparing similar-sized companies in the British Software industry with market capitalizations below UK£159m, we found that the median total CEO compensation was UK£280k. So it looks like Rosslyn Data Technologies compensates Paul Watts in line with the median for the industry.

Component	2024	2023	Proportion (2024)
Salary	UK£220k	UK£180k	79%
Other	UK£60k	UK£19k	21%
Total Compensation	UK£280k	UK£199k	100%

On an industry level, around 65% of total compensation represents salary and 35% is other remuneration. According to our research, Rosslyn Data Technologies has allocated a higher percentage of pay to salary in comparison to the wider industry. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.

Rosslyn Data Technologies plc's Growth

Rosslyn Data Technologies plc's earnings per share (EPS) grew 20% per year over the last three years. In the last year, its revenue is down 5.2%.

Shareholders would be glad to know that the company has improved itself over the last few years. While it would be good to see revenue growth, profits matter more in the end. 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 Rosslyn Data Technologies plc Been A Good Investment?

Few Rosslyn Data Technologies plc shareholders would feel satisfied with the return of -98% over three years. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

To Conclude...

Shareholders have not seen their shares grow in value, rather they have seen their shares decline. The fact that the stock price hasn't grown along with earnings may indicate that other issues may be affecting that stock. If there are some unknown variables that are influencing the stock's price, surely shareholders would have some concerns. The upcoming AGM will be a chance for shareholders to question the board on key matters, such as CEO remuneration or any other issues they might have and revisit their investment thesis with regards to the company.

CEO pay is simply one of the many factors that need to be considered while examining business performance. We did our research and identified 5 warning signs (and 3 which are a bit concerning) in Rosslyn Data Technologies we think you should know about.

Switching gears from Rosslyn Data Technologies, 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. 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.