Does Reedy Lagoon Corporation Limited’s (ASX:RLC) CEO Pay Matter?

Hector Vargas

Tue, Dec 25, 2018, 7:03 PM

In 2007 Geof Fethers was appointed CEO of Reedy Lagoon Corporation Limited (ASX:RLC). First, this article will compare CEO compensation with compensation at similar sized companies. Then we’ll look at a snap shot of the business growth. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This process should give us an idea about how appropriately the CEO is paid.

See our latest analysis for Reedy Lagoon

How Does Geof Fethers’s Compensation Compare With Similar Sized Companies?

According to our data, Reedy Lagoon Corporation Limited has a market capitalization of AU$2.4m, and pays its CEO total annual compensation worth AU$161k. (This number is for the twelve months until 2018). We note that’s an increase of 8.1% above last year. While this analysis focuses on total compensation, it’s worth noting the salary is lower, valued at AU$132k. We examined a group of similar sized companies, with market capitalizations of below AU$282m. The median CEO compensation in that group is AU$368k.

This would give shareholders a good impression of the company, since most similar size companies have to pay more, leaving less for shareholders. While this is a good thing, you’ll need to understand the business better before you can form an opinion.

The graphic below shows how CEO compensation at Reedy Lagoon has changed from year to year.

ASX:RLC CEO Compensation December 26th 18

Is Reedy Lagoon Corporation Limited Growing?

Over the last three years Reedy Lagoon Corporation Limited has shrunk its earnings per share by an average of 33% per year. Its revenue is down -42% over last year.

Few shareholders would be pleased to read that earnings per share are lower over three years. 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.

We don’t have analyst forecasts, but you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.

Has Reedy Lagoon Corporation Limited Been A Good Investment?

I think that the total shareholder return of 39%, over three years, would leave most Reedy Lagoon Corporation Limited shareholders smiling. So they may not be at all concerned if the CEO is paid more than is normal for companies around the same size.