We Discuss Why RA International Group plc's (LON:RAI) CEO Compensation May Be Closely Reviewed

editorial-team@simplywallst.com (Simply Wall St)

Wed, Nov 15, 2023, 10:02 PM 4 min read

Key Insights

RA International Group's Annual General Meeting to take place on 22nd of November
Salary of US$411.0k is part of CEO Soraya Narfeldt's total remuneration
The total compensation is similar to the average for the industry
RA International Group's three-year loss to shareholders was 77% while its EPS was down 71% over the past three years

Shareholders will probably not be too impressed with the underwhelming results at RA International Group plc (LON:RAI) recently. Shareholders will be interested in what the board will have to say about turning performance around at the next AGM on 22nd of November. It would also be an opportunity for shareholders to influence management through voting on company resolutions such as executive remuneration, which could impact the firm significantly. The data we present below explains why we think CEO compensation is not consistent with recent performance.

View our latest analysis for RA International Group

Comparing RA International Group plc's CEO Compensation With The Industry

At the time of writing, our data shows that RA International Group plc has a market capitalization of UK£17m, and reported total annual CEO compensation of US$452k for the year to December 2022. That's a slight decrease of 4.2% on the prior year. We note that the salary portion, which stands at US$411.0k constitutes the majority of total compensation received by the CEO.

On comparing similar-sized companies in the British Construction industry with market capitalizations below UK£161m, we found that the median total CEO compensation was US$517k. This suggests that RA International Group remunerates its CEO largely in line with the industry average. Moreover, Soraya Narfeldt also holds UK£9.3m worth of RA International Group stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component	2022	2021	Proportion (2022)
Salary	US$411k	US$408k	91%
Other	US$41k	US$64k	9%
Total Compensation	US$452k	US$472k	100%

Speaking on an industry level, nearly 37% of total compensation represents salary, while the remainder of 63% is other remuneration. RA International Group pays out 91% of remuneration in the form of a salary, significantly higher than the industry average. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

ceo-compensation — AIM:RAI CEO Compensation November 16th 2023

A Look at RA International Group plc's Growth Numbers

Over the last three years, RA International Group plc has shrunk its earnings per share by 71% per year. In the last year, its revenue is up 11%.

Few shareholders would be pleased to read that EPS have declined. There's no doubt that the silver lining is that revenue is up. But it isn't sufficiently fast growth to overlook the fact that EPS has gone backwards over three years. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. While we don't have analyst forecasts for the company, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.

Has RA International Group plc Been A Good Investment?

The return of -77% over three years would not have pleased RA International Group plc shareholders. So shareholders would probably want the company to be less generous with CEO compensation.

In Summary...

Along with the business performing poorly, shareholders have suffered with poor share price returns on their investments, suggesting that there's little to no chance of them being in favor of a CEO pay raise. 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 identified 3 warning signs for RA International Group (2 make us uncomfortable!) 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. 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.