This article will reflect on the compensation paid to Michael Hartnett who has served as CEO of RBC Bearings Incorporated (NASDAQ:ROLL) since 1992. This analysis will also assess whether RBC Bearings pays its CEO appropriately, considering recent earnings growth and total shareholder returns.
Comparing RBC Bearings Incorporated's CEO Compensation With the industry
According to our data, RBC Bearings Incorporated has a market capitalization of US$3.1b, and paid its CEO total annual compensation worth US$12m over the year to March 2020. That's a modest increase of 7.1% on the prior year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$775k.
For comparison, other companies in the same industry with market capitalizations ranging between US$2.0b and US$6.4b had a median total CEO compensation of US$6.3m. Accordingly, our analysis reveals that RBC Bearings Incorporated pays Michael Hartnett north of the industry median. Furthermore, Michael Hartnett directly owns US$50m worth of shares in the company, implying that they are deeply invested in the company's success.
Speaking on an industry level, nearly 16% of total compensation represents salary, while the remainder of 84% is other remuneration. RBC Bearings pays a modest slice of remuneration through salary, as compared to the broader industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.
RBC Bearings Incorporated's Growth
Over the past three years, RBC Bearings Incorporated has seen its earnings per share (EPS) grow by 15% per year. It saw its revenue drop 1.1% over the last year.
This demonstrates that the company has been improving recently and is good news for the shareholders. While it would be good to see revenue growth, profits matter more in the end. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.
Has RBC Bearings Incorporated Been A Good Investment?
With a total shareholder return of 4.9% over three years, RBC Bearings Incorporated has done okay by shareholders. But they probably wouldn't be so happy as to think the CEO should be paid more than is normal, for companies around this size.
As previously discussed, Michael is compensated more than what is normal for CEOs of companies of similar size, and which belong to the same industry. However, the EPS growth over three years is certainly impressive. We also think investor returns are steady over the same time period. So, considering the EPS growth we do not wish to criticize CEO compensation, though we'd recommend further research on management.
CEO compensation can have a massive impact on performance, but it's just one element. We did our research and spotted 1 warning sign for RBC Bearings that investors should look into moving forward.
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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