Here's What We Think About RMR Group's (NASDAQ:RMR) CEO Pay

This article will reflect on the compensation paid to Adam Portnoy who has served as CEO of The RMR Group Inc. (NASDAQ:RMR) since 2015. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for RMR Group.

Check out our latest analysis for RMR Group

How Does Total Compensation For Adam Portnoy Compare With Other Companies In The Industry?

According to our data, The RMR Group Inc. has a market capitalization of US$916m, and paid its CEO total annual compensation worth US$4.1m over the year to September 2019. We note that's a decrease of 12% compared to last year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$325k.

In comparison with other companies in the industry with market capitalizations ranging from US$400m to US$1.6b, the reported median CEO total compensation was US$4.9m. From this we gather that Adam Portnoy is paid around the median for CEOs in the industry. What's more, Adam Portnoy holds US$1.6m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

On an industry level, around 32% of total compensation represents salary and 68% is other remuneration. In RMR Group's case, non-salary compensation represents a greater slice of total remuneration, in comparison 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.

A Look at The RMR Group Inc.'s Growth Numbers

The RMR Group Inc. has reduced its earnings per share by 12% a year over the last three years. In the last year, its revenue is down 42%.

Few shareholders would be pleased to read that EPS have declined. This is compounded by the fact revenue is actually down on last year. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. 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?

Since shareholders would have lost about 38% over three years, some The RMR Group Inc. investors would surely be feeling negative emotions. So shareholders would probably want the company to be lessto generous with CEO compensation.

In Summary...

As previously discussed, Adam 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.

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 2 warning signs for RMR Group (of which 1 doesn't sit too well with us!) 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.

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