Here's Why Shareholders Will Not Be Complaining About Rent-A-Center, Inc.'s (NASDAQ:RCII) CEO Pay Packet

By
Simply Wall St
Published
June 01, 2021
NasdaqGS:RCII
Source: Shutterstock

The performance at Rent-A-Center, Inc. (NASDAQ:RCII) has been quite strong recently and CEO Mitch Fadel has played a role in it. Shareholders will have this at the front of their minds in the upcoming AGM on 08 June 2021. This would also be a chance for them to hear the board review the financial results, discuss future company strategy and vote on any resolutions such as executive remuneration. Here is our take on why we think CEO compensation is not extravagant.

Check out our latest analysis for Rent-A-Center

Comparing Rent-A-Center, Inc.'s CEO Compensation With the industry

According to our data, Rent-A-Center, Inc. has a market capitalization of US$4.2b, and paid its CEO total annual compensation worth US$9.2m over the year to December 2020. That's a fairly small increase of 6.4% over the previous year. While we always look at total compensation first, our analysis shows that the salary component is less, at US$998k.

On examining similar-sized companies in the industry with market capitalizations between US$2.0b and US$6.4b, we discovered that the median CEO total compensation of that group was US$8.1m. From this we gather that Mitch Fadel is paid around the median for CEOs in the industry. Moreover, Mitch Fadel also holds US$26m worth of Rent-A-Center stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component20202019Proportion (2020)
Salary US$998k US$954k 11%
Other US$8.2m US$7.7m 89%
Total CompensationUS$9.2m US$8.7m100%

On an industry level, around 15% of total compensation represents salary and 85% is other remuneration. In Rent-A-Center's case, non-salary compensation represents a greater slice of total remuneration, 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.

ceo-compensation
NasdaqGS:RCII CEO Compensation June 2nd 2021

Rent-A-Center, Inc.'s Growth

Over the past three years, Rent-A-Center, Inc. has seen its earnings per share (EPS) grow by 69% per year. In the last year, its revenue is up 18%.

This demonstrates that the company has been improving recently and is good news for the shareholders. It's also good to see decent revenue growth in the last year, suggesting the business is healthy and growing. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.

Has Rent-A-Center, Inc. Been A Good Investment?

Boasting a total shareholder return of 580% over three years, Rent-A-Center, Inc. has done well by shareholders. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.

To Conclude...

Given the company's decent performance, the CEO remuneration policy might not be shareholders' central point of focus in the AGM. However, investors will get the chance to engage on key strategic initiatives and future growth opportunities for the company and set their longer-term expectations.

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. That's why we did some digging and identified 5 warning signs for Rent-A-Center that investors should think about before committing capital to this stock.

Switching gears from Rent-A-Center, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.

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