We Think Korvest Ltd's (ASX:KOV) CEO Compensation Looks Fair

It would be hard to discount the role that CEO Chris Hartwig has played in delivering the impressive results at Korvest Ltd (ASX:KOV) recently. Shareholders will have this at the front of their minds in the upcoming AGM on 21 October 2022. This would also be a chance for them to hear the board review the financial results, discuss future company strategy and vote on any resolutions such as executive remuneration. Here is our take on why we think CEO compensation is not extravagant.

Check out the opportunities and risks within the AU Machinery industry.

Comparing Korvest Ltd's CEO Compensation With The Industry

At the time of writing, our data shows that Korvest Ltd has a market capitalization of AU$81m, and reported total annual CEO compensation of AU$621k for the year to June 2022. This means that the compensation hasn't changed much from last year. In particular, the salary of AU$343.3k, makes up a fairly large portion of the total compensation being paid to the CEO.

In comparison with other companies in the industry with market capitalizations under AU$321m, the reported median total CEO compensation was AU$490k. This suggests that Korvest remunerates its CEO largely in line with the industry average. Moreover, Chris Hartwig also holds AU$794k worth of Korvest stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component	2022	2021	Proportion (2022)
Salary	AU$343k	AU$332k	55%
Other	AU$277k	AU$305k	45%
Total Compensation	AU$621k	AU$637k	100%

Speaking on an industry level, nearly 71% of total compensation represents salary, while the remainder of 29% is other remuneration. In Korvest's case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.

Korvest Ltd's Growth

Over the past three years, Korvest Ltd has seen its earnings per share (EPS) grow by 56% per year. In the last year, its revenue is up 42%.

This demonstrates that the company has been improving recently and is good news for the shareholders. The combination of strong revenue growth with medium-term EPS improvement certainly points to the kind of growth we like to see. 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 Korvest Ltd Been A Good Investment?

We think that the total shareholder return of 165%, over three years, would leave most Korvest Ltd shareholders smiling. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

In Summary...

Seeing that the company has put in a relatively good performance, the CEO remuneration policy may not be the focus at the AGM. However, investors will get the chance to engage on key strategic initiatives and future growth opportunities for the company and set their longer-term expectations.

CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. We identified 3 warning signs for Korvest (1 is concerning!) that you should be aware of before investing here.

Important note: Korvest 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.

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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.