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Our View On Rank Group's (LON:RNK) CEO Pay

John O'Reilly became the CEO of The Rank Group Plc (LON:RNK) in 2018, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Rank Group.

See our latest analysis for Rank Group

Comparing The Rank Group Plc's CEO Compensation With the industry

Our data indicates that The Rank Group Plc has a market capitalization of UK£675m, and total annual CEO compensation was reported as UK£552k for the year to June 2020. That's a slight decrease of 4.8% on the prior year. We note that the salary portion, which stands at UK£475.0k constitutes the majority of total compensation received by the CEO.

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In comparison with other companies in the industry with market capitalizations ranging from UK£300m to UK£1.2b, the reported median CEO total compensation was UK£661k. So it looks like Rank Group compensates John O'Reilly in line with the median for the industry. What's more, John O'Reilly holds UK£461k worth of shares in the company in their own name.

Component

2020

2019

Proportion (2020)

Salary

UK£475k

UK£500k

86%

Other

UK£77k

UK£80k

14%

Total Compensation

UK£552k

UK£580k

100%

Speaking on an industry level, nearly 74% of total compensation represents salary, while the remainder of 26% is other remuneration. Rank Group pays out 86% of remuneration in the form of a salary, significantly higher than the industry average. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

ceo-compensation
ceo-compensation

A Look at The Rank Group Plc's Growth Numbers

Over the last three years, The Rank Group Plc has shrunk its earnings per share by 46% per year. In the last year, its revenue is down 8.2%.

Overall this is not a very positive result for shareholders. And the impression is worse when you consider revenue is down year-on-year. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. 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 The Rank Group Plc Been A Good Investment?

Given the total shareholder loss of 32% over three years, many shareholders in The Rank Group Plc are probably rather dissatisfied, to say the least. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

As previously discussed, John is compensated close to the median for companies of its size, and which belong to the same industry. On the other hand, EPS growth and total shareholder return have been negative for the last three years. It's tough to call out the compensation as inappropriate, but shareholders might not favor a raise before company performance improves.

CEO compensation can have a massive impact on performance, but it's just one element. We've identified 4 warning signs for Rank Group that investors should be aware of in a dynamic business environment.

Important note: Rank Group 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.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com.