Mark Williams has been the CEO of Red 5 Limited (ASX:RED) since 2014. First, this article will compare CEO compensation with compensation at similar sized companies. Next, we'll consider growth that the business demonstrates. And finally - as a second measure of performance - we will look at the returns shareholders have received over the last few years. This method should give us information to assess how appropriately the company pays the CEO.
Check out our latest analysis for Red 5
How Does Mark Williams's Compensation Compare With Similar Sized Companies?
At the time of writing, our data says that Red 5 Limited has a market cap of AU$380m, and reported total annual CEO compensation of AU$962k for the year to June 2019. While we always look at total compensation first, we note that the salary component is less, at AU$523k. We looked at a group of companies with market capitalizations from AU$145m to AU$582m, and the median CEO total compensation was AU$713k.
It would therefore appear that Red 5 Limited pays Mark Williams more than the median CEO remuneration at companies of a similar size, in the same market. However, this fact alone doesn't mean the remuneration is too high. We can get a better idea of how generous the pay is by looking at the performance of the underlying business.
The graphic below shows how CEO compensation at Red 5 has changed from year to year.
Is Red 5 Limited Growing?
Over the last three years Red 5 Limited has grown its earnings per share (EPS) by an average of 24% per year (using a line of best fit). It achieved revenue growth of 100% over the last year.
This shows that the company has improved itself over the last few years. Good news for shareholders. The combination of strong revenue growth with medium-term earnings per share improvement certainly points to the kind of growth I like to see. You might want to check this free visual report on analyst forecasts for future earnings.
Has Red 5 Limited Been A Good Investment?
Most shareholders would probably be pleased with Red 5 Limited for providing a total return of 338% over three years. 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.
In Summary...
We compared the total CEO remuneration paid by Red 5 Limited, and compared it to remuneration at a group of similar sized companies. Our data suggests that it pays above the median CEO pay within that group.
Importantly, though, the company has impressed with its earnings per share growth, over three years. In addition, shareholders have done well over the same time period. Considering this fine result for shareholders, we daresay the CEO compensation might be apt. So you may want to check if insiders are buying Red 5 shares with their own money (free access).