Joshua Zhou became the CEO of AuMake Limited (ASX:AUK) in 2017, 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 AuMake
Comparing AuMake Limited's CEO Compensation With the industry
According to our data, AuMake Limited has a market capitalization of AU$29m, and paid its CEO total annual compensation worth AU$247k over the year to June 2020. Notably, that's a decrease of 17% over the year before. In particular, the salary of AU$227.6k, makes up a huge portion of the total compensation being paid to the CEO.
On comparing similar-sized companies in the industry with market capitalizations below AU$263m, we found that the median total CEO compensation was AU$811k. That is to say, Joshua Zhou is paid under the industry median. Furthermore, Joshua Zhou directly owns AU$4.3m worth of shares in the company, implying that they are deeply invested in the company's success.
| Component | 2020 | 2019 | Proportion (2020) |
| Salary | AU$228k | AU$274k | 92% |
| Other | AU$20k | AU$24k | 8% |
| Total Compensation | AU$247k | AU$298k | 100% |
On an industry level, roughly 61% of total compensation represents salary and 39% is other remuneration. According to our research, AuMake has allocated a higher percentage of pay to salary in comparison to the wider industry. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.
AuMake Limited's Growth
AuMake Limited's earnings per share (EPS) grew 26% per year over the last three years. Its revenue is up 38% over the last year.
Shareholders would be glad to know that the company has improved itself over the last few years. Most shareholders would be pleased to see strong revenue growth combined with EPS growth. This combo suggests a fast growing business. 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?
Given the total shareholder loss of 89% over three years, many shareholders in AuMake Limited are probably rather dissatisfied, to say the least. So shareholders would probably want the company to be lessto generous with CEO compensation.
In Summary...
As we touched on above, AuMake Limited is currently paying its CEO below the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. Importantly though, the company has impressed with its EPS growth over three years. Considering EPS are on the up, we would say Joshua is compensated fairly. But shareholders will likely want to hold off on any raise for Joshua until investor returns are positive.
While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. We did our research and spotted 3 warning signs for AuMake 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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This 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:AUK
AuMake
Engages in the sale of various products through its online e-commerce store and outsourced Kiwi Buy brand stores in Australia, Hong Kong, Mainland China, and New Zealand.
Excellent balance sheet low.
