The performance at AuMake Limited (ASX:AUK) has been rather lacklustre of late and shareholders may be wondering what CEO Joshua Zhou is planning to do about this. At the next AGM coming up on 22 November 2021, they can influence managerial decision making through voting on resolutions, including executive remuneration. It has been shown that setting appropriate executive remuneration incentivises the management to act in the interests of shareholders. In our opinion, CEO compensation does not look excessive and we discuss why.
How Does Total Compensation For Joshua Zhou Compare With Other Companies In The Industry?
Our data indicates that AuMake Limited has a market capitalization of AU$13m, and total annual CEO compensation was reported as AU$373k for the year to June 2021. We note that's an increase of 51% above last year. Notably, the salary which is AU$307.5k, represents most of the total compensation being paid.
For comparison, other companies in the industry with market capitalizations below AU$273m, reported a median total CEO compensation of AU$1.0m. Accordingly, AuMake pays its CEO under the industry median. Moreover, Joshua Zhou also holds AU$1.3m worth of AuMake stock directly under their own name, which reveals to us that they have a significant personal stake in the company.
On an industry level, around 38% of total compensation represents salary and 62% is other remuneration. AuMake pays out 82% of remuneration in the form of a salary, significantly higher than the industry average. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.
AuMake Limited's Growth
Over the past three years, AuMake Limited has seen its earnings per share (EPS) grow by 18% per year. It saw its revenue drop 79% over the last year.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's always a tough situation when revenues are not growing, but ultimately profits are more important. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.
Has AuMake Limited Been A Good Investment?
The return of -92% over three years would not have pleased AuMake Limited shareholders. This suggests it would be unwise for the company to pay the CEO too generously.
The fact that shareholders are sitting on a loss is certainly disheartening. This contrasts to the strong EPS growth recently however, and suggests that there may be other factors at play driving down the share price. A key focus for the board and management will be how to align the share price with fundamentals. In the upcoming AGM, shareholders should take this opportunity to raise these concerns with the board and revisit their investment thesis with regards to the company.
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 5 warning signs for AuMake (of which 4 can't be ignored!) that you should know about in order to have a holistic understanding of the stock.
Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.
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.
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