This article will reflect on the compensation paid to Adam Portnoy who has served as CEO of The RMR Group Inc. (NASDAQ:RMR) since 2015. This analysis will also assess whether RMR Group pays its CEO appropriately, considering recent earnings growth and total shareholder returns.
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$1.2b, and paid its CEO total annual compensation worth US$3.9m over the year to September 2020. That's a slight decrease of 6.2% on the prior year. While we always look at total compensation first, our analysis shows that the salary component is less, at US$350k.
In comparison with other companies in the industry with market capitalizations ranging from US$400m to US$1.6b, the reported median CEO total compensation was US$2.2m. Hence, we can conclude that Adam Portnoy is remunerated higher than the industry median. Moreover, Adam Portnoy also holds US$2.5m worth of RMR Group stock directly under their own name, which reveals to us that they have a significant personal stake in the company.
On an industry level, around 29% of total compensation represents salary and 71% is other remuneration. RMR Group sets aside a smaller share of compensation for salary, in comparison to the overall industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.
A Look at The RMR Group Inc.'s Growth Numbers
The RMR Group Inc. has reduced its earnings per share by 12% a year over the last three years. Its revenue is down 43% over the previous year.
The decline in EPS is a bit concerning. And the fact that revenue is down year on year arguably paints an ugly picture. 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?
Given the total shareholder loss of 27% over three years, many shareholders in The RMR Group Inc. are probably rather dissatisfied, to say the least. So shareholders would probably want the company to be lessto generous with CEO compensation.
As we noted earlier, RMR Group pays its CEO higher than the norm for similar-sized companies belonging to the same industry. Disappointingly, share price gains over the last three years have failed to materialize. To make matters worse, EPS growth has also been negative during this period. Overall, with such poor performance, shareholder's would probably have questions if the company decided to give the CEO a raise.
While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. That's why we did some digging and identified 3 warning signs for RMR Group that investors should think about before committing capital to this stock.
Important note: RMR Group is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.
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