Chris Hartwig became the CEO of Korvest Ltd (ASX:KOV) in 2018, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.
Check out our latest analysis for Korvest
How Does Total Compensation For Chris Hartwig Compare With Other Companies In The Industry?
Our data indicates that Korvest Ltd has a market capitalization of AU$57m, and total annual CEO compensation was reported as AU$531k for the year to June 2020. That's a notable increase of 12% on last year. Notably, the salary which is AU$318.4k, represents most of the total compensation being paid.
In comparison with other companies in the industry with market capitalizations under AU$260m, the reported median total CEO compensation was AU$348k. This suggests that Chris Hartwig is paid more than the median for the industry. What's more, Chris Hartwig holds AU$272k worth of shares in the company in their own name.
| Component | 2020 | 2019 | Proportion (2020) |
| Salary | AU$318k | AU$326k | 60% |
| Other | AU$213k | AU$148k | 40% |
| Total Compensation | AU$531k | AU$474k | 100% |
On an industry level, roughly 84% of total compensation represents salary and 16% is other remuneration. Korvest sets aside a smaller share of compensation for salary, in comparison to the overall industry. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.
Korvest Ltd's Growth
Over the past three years, Korvest Ltd has seen its earnings per share (EPS) grow by 55% per year. Its revenue is down 7.8% over the previous year.
Shareholders would be glad to know that the company has improved itself over the last few years. The lack of revenue growth isn't ideal, but it is the bottom line that counts most in business. 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 Korvest Ltd Been A Good Investment?
Boasting a total shareholder return of 157% over three years, Korvest Ltd has done well by shareholders. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.
In Summary...
As previously discussed, Chris is compensated more than what is normal for CEOs of companies of similar size, and which belong to the same industry. However, Korvest has produced strong EPS growth and shareholder returns over the last three years. Considering such exceptional results for the company, we'd venture to say CEO compensation is fair. And given most shareholders are probably very happy with recent returns, they might even think that Chris deserves a raise!
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. We did our research and spotted 2 warning signs for Korvest 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.
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Access Free AnalysisThis 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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About ASX:KOV
Korvest
Engages in the hot dip galvanizing and sheet metal fabrication businesses primarily in Australia.
Flawless balance sheet with proven track record and pays a dividend.
