This Is Why AuMake Limited's (ASX:AUK) CEO Compensation Looks Appropriate

Key Insights

• AuMake to hold its Annual General Meeting on 29th of November
• Salary of AU$207.6k is part of CEO Joshua Zhou's total remuneration
• The total compensation is 60% less than the average for the industry
• AuMake's three-year loss to shareholders was 94% while its EPS grew by 47% over the past three years

Performance at AuMake Limited (ASX:AUK) has been rather uninspiring recently and shareholders may be wondering how CEO Joshua Zhou plans to fix this. They will get a chance to exercise their voting power to influence the future direction of the company in the next AGM on 29th of November. 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.

Check out our latest analysis for AuMake

How Does Total Compensation For Joshua Zhou Compare With Other Companies In The Industry?

At the time of writing, our data shows that AuMake Limited has a market capitalization of AU$8.4m, and reported total annual CEO compensation of AU$321k for the year to June 2023. That's a notable increase of 56% on last year. In particular, the salary of AU$207.6k, makes up a huge portion of the total compensation being paid to the CEO.

On comparing similar-sized companies in the Australian Specialty Retail industry with market capitalizations below AU$305m, we found that the median total CEO compensation was AU$809k. In other words, AuMake pays its CEO lower than the industry median. What's more, Joshua Zhou holds AU$318k worth of shares in the company in their own name.

Component	2023	2022	Proportion (2023)
Salary	AU$208k	AU$134k	65%
Other	AU$114k	AU$71k	35%
Total Compensation	AU$321k	AU$205k	100%

Speaking on an industry level, nearly 53% of total compensation represents salary, while the remainder of 47% is other remuneration. It's interesting to note that AuMake pays out a greater portion of remuneration through salary, compared to the industry. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

AuMake Limited's Growth

AuMake Limited's earnings per share (EPS) grew 47% per year over the last three years. It saw its revenue drop 57% over the last year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. The lack of revenue growth isn't ideal, but it is the bottom line that counts most in business. While we don't have analyst forecasts for the company, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.

Has AuMake Limited Been A Good Investment?

The return of -94% over three years would not have pleased AuMake Limited shareholders. So shareholders would probably want the company to be less generous with CEO compensation.

In Summary...

The fact that shareholders have earned a negative share price return is certainly disconcerting. This diverges with the robust growth in EPS, suggesting that there is a large discrepancy between share price and fundamentals. There needs to be more focus by management and the board to examine why the share price has diverged from fundamentals. In the upcoming AGM, shareholders will get the opportunity to discuss these concerns with the board and assess if the board's plan is likely to improve company performance.

CEO pay is simply one of the many factors that need to be considered while examining business performance. That's why we did our research, and identified 4 warning signs for AuMake (of which 3 are concerning!) 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.

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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.