Yahoo Finance This Is Why The RMR Group Inc.'s (NASDAQ:RMR) CEO Compensation Looks Appropriate
Key Insights
RMR Group's Annual General Meeting to take place on 29th of March
Salary of US$375.0k is part of CEO Adam Portnoy's total remuneration
The total compensation is similar to the average for the industry
Over the past three years, RMR Group's EPS fell by 0.6% and over the past three years, the total shareholder return was 24%
The share price of The RMR Group Inc. (NASDAQ:RMR) has been growing in the past few years, however, the per-share earnings growth has been lacking, suggesting something is amiss. These concerns will be at the front of shareholders' minds as they go into the AGM coming up on 29th of March. One way that shareholders can influence managerial decisions is through voting on CEO and executive remuneration packages, which studies show could impact company performance. From what we gathered, we think shareholders should be wary of raising CEO compensation until the company shows some marked improvement.
Check out our latest analysis for RMR Group
Comparing The RMR Group Inc.'s CEO Compensation With The Industry
At the time of writing, our data shows that The RMR Group Inc. has a market capitalization of US$799m, and reported total annual CEO compensation of US$4.2m for the year to September 2022. That's a slight decrease of 3.7% on the prior year. While we always look at total compensation first, our analysis shows that the salary component is less, at US$375k.
On comparing similar companies from the American Real Estate industry with market caps ranging from US$400m to US$1.6b, we found that the median CEO total compensation was US$4.9m. This suggests that RMR Group remunerates its CEO largely in line with the industry average. Furthermore, Adam Portnoy directly owns US$2.4m worth of shares in the company, implying that they are deeply invested in the company's success.
Component | 2022 | 2021 | Proportion (2022) |
Salary | US$375k | US$350k | 9% |
Other | US$3.9m | US$4.1m | 91% |
Total Compensation | US$4.2m | US$4.4m | 100% |
On an industry level, roughly 23% of total compensation represents salary and 77% is other remuneration. RMR Group pays a modest slice of remuneration through salary, as compared to the broader industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.
The RMR Group Inc.'s Growth
The RMR Group Inc. saw earnings per share stay pretty flat over the last three years. Its revenue is up 13% over the last year.
The lack of EPS growth is certainly uninspiring. While the revenue growth is good to see, it is outweighed by the fact that EPS are down, over three years. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..
Has The RMR Group Inc. Been A Good Investment?
With a total shareholder return of 24% over three years, The RMR Group Inc. 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.
In Summary...
While it's true that shareholders have owned decent returns, it's hard to overlook the lack of earnings growth and this makes us question whether these returns will continue. Shareholders should make the most of the coming opportunity to question the board on key concerns they may have and revisit their investment thesis with regards to the company.
CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. That's why we did some digging and identified 1 warning sign for RMR Group that investors should think about before committing capital to this stock.
Important note: RMR 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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.
Join A Paid User Research Session
You’ll receive a US$30 Amazon Gift card for 1 hour of your time while helping us build better investing tools for the individual investors like yourself. Sign up here
