What Can We Learn About Rand Capital's (NASDAQ:RAND) CEO Compensation?

This article will reflect on the compensation paid to Pete Grum who has served as CEO of Rand Capital Corporation (NASDAQ:RAND) since 1996. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Rand Capital.

Check out our latest analysis for Rand Capital

How Does Total Compensation For Pete Grum Compare With Other Companies In The Industry?

According to our data, Rand Capital Corporation has a market capitalization of US$32m, and paid its CEO total annual compensation worth US$324k over the year to December 2019. This means that the compensation hasn't changed much from last year. In particular, the salary of US$222.5k, makes up a huge portion of the total compensation being paid to the CEO.

In comparison with other companies in the industry with market capitalizations under US$200m, the reported median total CEO compensation was US$400k. This suggests that Rand Capital remunerates its CEO largely in line with the industry average. Furthermore, Pete Grum directly owns US$413k worth of shares in the company.

On an industry level, around 14% of total compensation represents salary and 86% is other remuneration. It's interesting to note that Rand Capital pays out a greater portion of remuneration through salary, compared to the industry. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

Rand Capital Corporation's Growth

Over the past three years, Rand Capital Corporation has seen its earnings per share (EPS) grow by 13% per year. Its revenue is up 26% over the last year.

Shareholders would be glad to know that the company has improved itself over the last few years. It's great to see that revenue growth is strong, too. These metrics suggest the business is growing strongly. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Rand Capital Corporation Been A Good Investment?

Rand Capital Corporation has generated a total shareholder return of 6.5% over three years, so most shareholders wouldn't be too disappointed. But they probably wouldn't be so happy as to think the CEO should be paid more than is normal, for companies around this size.

To Conclude...

As previously discussed, Pete is compensated close to the median for companies of its size, and which belong to the same industry. But EPS growth for the company has been strong over the last three years, though shareholder returns in comparison haven't been as impressive. As a result of these considerations, we would suggest the compensation is reasonable, but looking ahead shareholders will likely want to see healthier returns.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. We identified 5 warning signs for Rand Capital (2 are potentially serious!) that you should be aware of before investing here.

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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