This article will reflect on the compensation paid to Rob Dawson who has served as CEO of RF Industries, Ltd. (NASDAQ:RFIL) since 2017. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for RF Industries.
How Does Total Compensation For Rob Dawson Compare With Other Companies In The Industry?
At the time of writing, our data shows that RF Industries, Ltd. has a market capitalization of US$60m, and reported total annual CEO compensation of US$741k for the year to October 2020. Notably, that's an increase of 50% over the year before. We note that the salary portion, which stands at US$400.0k constitutes the majority of total compensation received by the CEO.
For comparison, other companies in the industry with market capitalizations below US$200m, reported a median total CEO compensation of US$429k. Accordingly, our analysis reveals that RF Industries, Ltd. pays Rob Dawson north of the industry median. What's more, Rob Dawson holds US$550k worth of shares in the company in their own name.
On an industry level, roughly 33% of total compensation represents salary and 67% is other remuneration. According to our research, RF Industries has allocated a higher percentage of pay to salary in comparison to the wider industry. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.
A Look at RF Industries, Ltd.'s Growth Numbers
Over the last three years, RF Industries, Ltd. has shrunk its earnings per share by 20% per year. Its revenue is down 22% over the previous year.
Few shareholders would be pleased to read that EPS have declined. 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. 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 RF Industries, Ltd. Been A Good Investment?
Boasting a total shareholder return of 92% over three years, RF Industries, Ltd. 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.
As we noted earlier, RF Industries pays its CEO higher than the norm for similar-sized companies belonging to the same industry. The company isn't growing EPS, but shareholder returns have been impressive over the last three years. So while we don't think, Rob is paid too much, shareholders may want to see some positive EPS growth before pay rises are given out.
CEO compensation can have a massive impact on performance, but it's just one element. That's why we did some digging and identified 4 warning signs for RF Industries that you should be aware of before investing.
Important note: RF Industries 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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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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