We Think Shareholders Are Less Likely To Approve A Pay Rise For KNeoMedia Limited's (ASX:KNM) CEO For Now

Key Insights

• KNeoMedia's Annual General Meeting to take place on 16th of November
• Salary of AU$287.7k is part of CEO James Kellett's total remuneration
• Total compensation is similar to the industry average
• KNeoMedia's three-year loss to shareholders was 91% while its EPS grew by 26% over the past three years

The underwhelming share price performance of KNeoMedia Limited (ASX:KNM) in the past three years would have disappointed many shareholders. Despite positive EPS growth in the past few years, the share price hasn't tracked the fundamental performance of the company. Shareholders may want to question the board on the future direction of the company at the upcoming AGM on 16th of November. They could also try to influence management and firm direction through voting on resolutions such as executive remuneration and other company matters. Here's our take on why we think shareholders may want to be cautious of approving a raise for the CEO at the moment.

See our latest analysis for KNeoMedia

Comparing KNeoMedia Limited's CEO Compensation With The Industry

Our data indicates that KNeoMedia Limited has a market capitalization of AU$3.0m, and total annual CEO compensation was reported as AU$315k for the year to June 2023. That's mostly flat as compared to the prior year's compensation. We note that the salary portion, which stands at AU$287.7k constitutes the majority of total compensation received by the CEO.

In comparison with other companies in the Australia Entertainment industry with market capitalizations under AU$315m, the reported median total CEO compensation was AU$298k. So it looks like KNeoMedia compensates James Kellett in line with the median for the industry.

Component	2023	2022	Proportion (2023)
Salary	AU$288k	AU$288k	91%
Other	AU$28k	AU$24k	9%
Total Compensation	AU$315k	AU$311k	100%

Talking in terms of the industry, salary represented approximately 63% of total compensation out of all the companies we analyzed, while other remuneration made up 37% of the pie. KNeoMedia pays out 91% of remuneration in the form of a salary, significantly higher than the industry average. 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.

A Look at KNeoMedia Limited's Growth Numbers

KNeoMedia Limited's earnings per share (EPS) grew 26% per year over the last three years. In the last year, its revenue is up 242%.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. The combination of strong revenue growth with medium-term EPS improvement certainly points to the kind of growth we like to see. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has KNeoMedia Limited Been A Good Investment?

With a total shareholder return of -91% over three years, KNeoMedia Limited shareholders would by and large be disappointed. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

To Conclude...

Shareholders have not seen their shares grow in value, rather they have seen their shares decline. The stock's movement is disjointed with the company's earnings growth, which ideally should move in the same direction. Shareholders would probably be keen to find out what are the other factors could be weighing down the stock. At the upcoming AGM, shareholders will get the opportunity to discuss any issues with the board, including those related to CEO remuneration and assess if the board's plan will likely improve performance in the future.

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 6 warning signs for KNeoMedia (of which 5 shouldn't be ignored!) that you should know about in order to have a holistic understanding of the stock.

Switching gears from KNeoMedia, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.

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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.