Rob Rutherford has been the CEO of Red Metal Limited (ASX:RDM) since 2003, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Red Metal.

Check out our latest analysis for Red Metal

Comparing Red Metal Limited's CEO Compensation With the industry

At the time of writing, our data shows that Red Metal Limited has a market capitalization of AU$27m, and reported total annual CEO compensation of AU$302k for the year to June 2020. That's a notable decrease of 26% on last year. Notably, the salary which is AU$230.0k, represents most of the total compensation being paid.

On comparing similar-sized companies in the industry with market capitalizations below AU$283m, we found that the median total CEO compensation was AU$309k. From this we gather that Rob Rutherford is paid around the median for CEOs in the industry. What's more, Rob Rutherford holds AU$1.4m 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 69% of total compensation represents salary, while the remainder of 31% is other remuneration. Red Metal pays out 76% 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.

A Look at Red Metal Limited's Growth Numbers

Over the past three years, Red Metal Limited has seen its earnings per share (EPS) grow by 62% per year. In the last year, its revenue is up 297%.

This demonstrates that the company has been improving recently and is good news for the shareholders. It's great to see that revenue growth is strong, too. These metrics suggest the business is growing strongly. 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 Red Metal Limited Been A Good Investment?

Given the total shareholder loss of 36% over three years, many shareholders in Red Metal Limited are probably rather dissatisfied, to say the least. So shareholders would probably want the company to be lessto generous with CEO compensation.

To Conclude…

As previously discussed, Rob is compensated close to the median for companies of its size, and which belong to the same industry. On the other hand, the company has logged negative shareholder returns over the previous three years. However, EPS growth is positive over the same time frame. Overall, we wouldn't say Rob is paid an unjustified compensation, but shareholders might not favor a raise before shareholder returns show a positive trend.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. That's why we did our research, and identified 5 warning signs for Red Metal (of which 1 is a bit unpleasant!) that you should know about in order to have a holistic understanding of the stock.

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.

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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