Most Shareholders Will Probably Find That The Compensation For REX American Resources Corporation's (NYSE:REX) CEO Is Reasonable

The performance at REX American Resources Corporation (NYSE:REX) has been rather lacklustre of late and shareholders may be wondering what CEO Zafar Rizvi is planning to do about this. They will get a chance to exercise their voting power to influence the future direction of the company in the next AGM on 16 June 2021. It has been shown that setting appropriate executive remuneration incentivises the management to act in the interests of shareholders. In our opinion, CEO compensation does not look excessive and we discuss why.

View our latest analysis for REX American Resources

Comparing REX American Resources Corporation's CEO Compensation With the industry

According to our data, REX American Resources Corporation has a market capitalization of US$566m, and paid its CEO total annual compensation worth US$359k over the year to January 2021. That's a notable decrease of 35% on last year. Notably, the salary which is US$225.0k, represents most of the total compensation being paid.

On comparing similar companies from the same industry with market caps ranging from US$200m to US$800m, we found that the median CEO total compensation was US$1.3m. Accordingly, REX American Resources pays its CEO under the industry median. What's more, Zafar Rizvi holds US$5.7m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component	2021	2020	Proportion (2021)
Salary	US$225k	US$225k	63%
Other	US$134k	US$324k	37%
Total Compensation	US$359k	US$549k	100%

On an industry level, around 20% of total compensation represents salary and 80% is other remuneration. According to our research, REX American Resources has allocated a higher percentage of pay to salary in comparison to the wider industry. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

A Look at REX American Resources Corporation's Growth Numbers

Over the last three years, REX American Resources Corporation has shrunk its earnings per share by 24% per year. In the last year, its revenue is up 14%.

Overall this is not a very positive result for shareholders. And while it's good to see some good revenue growth recently, the growth isn't really fast enough for us to put aside my concerns around EPS. These factors suggest that the business performance wouldn't really justify a high pay packet 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 REX American Resources Corporation Been A Good Investment?

REX American Resources Corporation has served shareholders reasonably well, with a total return of 27% over three years. But they probably don't want to see the CEO paid more than is normal for companies around the same size.

To Conclude...

While it's true that shareholders have seen decent returns, it's hard to overlook the lack of earnings growth and this makes us wonder if the current returns can continue. These are are some concerns that shareholders may want to address the board when they revisit their investment thesis.

CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. We've identified 1 warning sign for REX American Resources that investors should be aware of in a dynamic business environment.

Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies that have HIGH return on equity and low debt.

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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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