The decent performance at Ryman Healthcare Limited (NZSE:RYM) recently will please most shareholders as they go into the AGM coming up on 28 July 2021. They will probably be more interested in hearing the board discuss future initiatives to further improve the business as they vote on resolutions such as executive remuneration. Here is our take on why we think CEO compensation is fair and may even warrant a raise.
Comparing Ryman Healthcare Limited's CEO Compensation With the industry
At the time of writing, our data shows that Ryman Healthcare Limited has a market capitalization of NZ$6.5b, and reported total annual CEO compensation of NZ$1.1m for the year to March 2021. Notably, that's a decrease of 18% over the year before. We note that the salary portion, which stands at NZ$1.08m constitutes the majority of total compensation received by the CEO.
On examining similar-sized companies in the industry with market capitalizations between NZ$2.9b and NZ$9.2b, we discovered that the median CEO total compensation of that group was NZ$3.5m. In other words, Ryman Healthcare pays its CEO lower than the industry median. What's more, Gordon MacLeod holds NZ$6.1m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.
Speaking on an industry level, nearly 72% of total compensation represents salary, while the remainder of 28% is other remuneration. Ryman Healthcare has gone down a largely traditional route, paying Gordon MacLeod a high salary, giving it preference over non-salary benefits. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.
Ryman Healthcare Limited's Growth
Ryman Healthcare Limited has seen its earnings per share (EPS) increase by 2.9% a year over the past three years. In the last year, its revenue is up 7.6%.
We're not particularly impressed by the revenue growth, but it is good to see modest EPS growth. It's clear the performance has been quite decent, but it it falls short of outstanding,based on this information. 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 Ryman Healthcare Limited Been A Good Investment?
With a total shareholder return of 12% over three years, Ryman Healthcare Limited shareholders would, in general, be reasonably content. But they probably don't want to see the CEO paid more than is normal for companies around the same size.
Ryman Healthcare pays its CEO a majority of compensation through a salary. While the company seems to be headed in the right direction performance-wise, there's always room for improvement. If it continues on the same road, shareholders might feel even more confident about their investment, and have little to no objections concerning CEO pay. Rather, investors would more likely want to engage on discussions related to key strategic initiatives and future growth opportunities for the company and set their longer-term expectations.
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 2 warning signs for Ryman Healthcare (1 makes us a bit uncomfortable!) that you should be aware of before investing here.
Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.
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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