Dan Rykhus became the CEO of Raven Industries, Inc. (NASDAQ:RAVN) in 2010, 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 assess whether Raven Industries pays its CEO appropriately, considering recent earnings growth and total shareholder returns.
How Does Total Compensation For Dan Rykhus Compare With Other Companies In The Industry?
Our data indicates that Raven Industries, Inc. has a market capitalization of US$862m, and total annual CEO compensation was reported as US$2.5m for the year to January 2020. That's a slight decrease of 5.1% on the prior year. While we always look at total compensation first, our analysis shows that the salary component is less, at US$713k.
For comparison, other companies in the same industry with market capitalizations ranging between US$400m and US$1.6b had a median total CEO compensation of US$1.1m. Accordingly, our analysis reveals that Raven Industries, Inc. pays Dan Rykhus north of the industry median. What's more, Dan Rykhus holds US$5.9m 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, roughly 10% of total compensation represents salary and 90% is other remuneration. Raven Industries pays out 28% of remuneration in the form of a salary, significantly higher than the industry average. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.
A Look at Raven Industries, Inc.'s Growth Numbers
Over the last three years, Raven Industries, Inc. has shrunk its earnings per share by 8.9% per year. Its revenue is down 8.0% over the previous year.
Overall this is not a very positive result for shareholders. This is compounded by the fact revenue is actually down on last year. 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 Raven Industries, Inc. Been A Good Investment?
Given the total shareholder loss of 24% over three years, many shareholders in Raven Industries, Inc. are probably rather dissatisfied, to say the least. Therefore, it might be upsetting for shareholders if the CEO were paid generously.
As previously discussed, Dan is compensated more than what is normal for CEOs of companies of similar size, and which belong to the same industry. Disappointingly, share price gains over the last three years have failed to materialize. Add to that declining EPS growth, and you have the perfect recipe for shareholder irritation. Understandably, the company's shareholders might have some questions about the CEO's remuneration, given the disappointing performance.
While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. We've identified 1 warning sign for Raven Industries that investors should be aware of in a dynamic business environment.
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. 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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