We Think The Compensation For Rayonier Inc.'s (NYSE:RYN) CEO Looks About Right

Despite positive share price growth of 12% for Rayonier Inc. (NYSE:RYN) over the last few years, earnings growth has been disappointing, which suggests something is amiss. Some of these issues will occupy shareholders' minds as the AGM rolls around on 20 May 2021. One way that shareholders can influence managerial decisions is through voting on CEO and executive remuneration packages, which studies show could impact company performance. From what we gathered, we think shareholders should be wary of raising CEO compensation until the company shows some marked improvement.

View our latest analysis for Rayonier

How Does Total Compensation For Dave Nunes Compare With Other Companies In The Industry?

Our data indicates that Rayonier Inc. has a market capitalization of US$5.2b, and total annual CEO compensation was reported as US$5.4m for the year to December 2020. That's a notable increase of 16% on last year. While we always look at total compensation first, our analysis shows that the salary component is less, at US$819k.

For comparison, other companies in the same industry with market capitalizations ranging between US$4.0b and US$12b had a median total CEO compensation of US$6.6m. So it looks like Rayonier compensates Dave Nunes in line with the median for the industry. Moreover, Dave Nunes also holds US$12m worth of Rayonier stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component	2020	2019	Proportion (2020)
Salary	US$819k	US$775k	15%
Other	US$4.6m	US$3.9m	85%
Total Compensation	US$5.4m	US$4.7m	100%

On an industry level, roughly 15% of total compensation represents salary and 85% is other remuneration. Rayonier is largely mirroring the industry average when it comes to the share a salary enjoys in overall compensation. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

Rayonier Inc.'s Growth

Over the last three years, Rayonier Inc. has shrunk its earnings per share by 49% per year. It achieved revenue growth of 1.6% over the last year.

The decline in EPS is a bit concerning. The fairly low revenue growth fails to impress given that the EPS is down. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Rayonier Inc. Been A Good Investment?

Rayonier Inc. has generated a total shareholder return of 12% over three years, so most shareholders would be reasonably content. 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...

While it's true that shareholders have owned decent returns, it's hard to overlook the lack of earnings growth and this makes us question whether these returns will continue. Shareholders should make the most of the coming opportunity to question the board on key concerns they may have and revisit their investment thesis with regards to the company.

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 Rayonier (1 shouldn't be ignored!) that you should be aware of before investing here.

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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