Here's Why It's Unlikely That The RMR Group Inc.'s (NASDAQ:RMR) CEO Will See A Pay Rise This Year

Key Insights

• RMR Group to hold its Annual General Meeting on 27th of March
• CEO Adam Portnoy's total compensation includes salary of US$375.0k
• Total compensation is 336% above industry average
• Over the past three years, RMR Group's EPS fell by 15% and over the past three years, the total loss to shareholders 30%

The RMR Group Inc. (NASDAQ:RMR) has not performed well recently and CEO Adam Portnoy will probably need to up their game. Shareholders can take the chance to hold the board and management accountable for the unsatisfactory performance at the next AGM on 27th of March. They will also get a chance to influence managerial decision-making through voting on resolutions such as executive remuneration, which may impact firm value in the future. From our analysis, we think CEO compensation may need a review in light of the recent performance.

Check out our latest analysis for RMR Group

Comparing The RMR Group Inc.'s CEO Compensation With The Industry

According to our data, The RMR Group Inc. has a market capitalization of US$544m, and paid its CEO total annual compensation worth US$5.0m over the year to September 2024. That's a notable increase of 17% on last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$375k.

On comparing similar companies from the American Real Estate industry with market caps ranging from US$200m to US$800m, we found that the median CEO total compensation was US$1.1m. Hence, we can conclude that Adam Portnoy is remunerated higher than the industry median. Furthermore, Adam Portnoy directly owns US$2.1m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2024	2023	Proportion (2024)
Salary	US$375k	US$375k	7%
Other	US$4.6m	US$3.9m	93%
Total Compensation	US$5.0m	US$4.3m	100%

Speaking on an industry level, nearly 38% of total compensation represents salary, while the remainder of 62% is other remuneration. It's interesting to note that RMR Group allocates a smaller portion of compensation to salary 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.

The RMR Group Inc.'s Growth

The RMR Group Inc. has reduced its earnings per share by 15% a year over the last three years. It saw its revenue drop 14% over the last year.

Overall this is not a very positive result for shareholders. This is compounded by the fact revenue is actually down on last year. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has The RMR Group Inc. Been A Good Investment?

Since shareholders would have lost about 30% over three years, some The RMR Group Inc. investors would surely be feeling negative emotions. So shareholders would probably want the company to be less generous with CEO compensation.

In Summary...

Given that shareholders haven't seen any positive returns on their investment, not to mention the lack of earnings growth, this may suggest that few of them would be willing to award the CEO with a pay rise. At the upcoming AGM, management will get a chance to explain how they plan to get the business back on track and address the concerns from investors.

CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. We did our research and identified 2 warning signs (and 1 which is potentially serious) in RMR Group we think you should know about.

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. 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.