Here's Why It's Unlikely That Kogan.com Ltd's (ASX:KGN) CEO Will See A Pay Rise This Year

Key Insights

• Kogan.com will host its Annual General Meeting on 22nd of November
• CEO Ruslan Kogan's total compensation includes salary of AU$423.5k
• The overall pay is 2,855% above the industry average
• Over the past three years, Kogan.com's EPS fell by 96% and over the past three years, the total loss to shareholders 75%

The results at Kogan.com Ltd (ASX:KGN) have been quite disappointing recently and CEO Ruslan Kogan bears some responsibility for this. Shareholders can take the chance to hold the board and management accountable for the unsatisfactory performance at the next AGM on 22nd of November. They will also get a chance to influence managerial decision-making through voting on resolutions such as executive remuneration, which may impact firm value in the future. We present the case why we think CEO compensation is out of sync with company performance.

Check out our latest analysis for Kogan.com

How Does Total Compensation For Ruslan Kogan Compare With Other Companies In The Industry?

According to our data, Kogan.com Ltd has a market capitalization of AU$486m, and paid its CEO total annual compensation worth AU$17m over the year to June 2023. That's a notable increase of 13% on last year. While we always look at total compensation first, our analysis shows that the salary component is less, at AU$424k.

In comparison with other companies in the Australian Multiline Retail industry with market capitalizations ranging from AU$306m to AU$1.2b, the reported median CEO total compensation was AU$581k. Hence, we can conclude that Ruslan Kogan is remunerated higher than the industry median. What's more, Ruslan Kogan holds AU$75m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component	2023	2022	Proportion (2023)
Salary	AU$424k	AU$424k	2%
Other	AU$17m	AU$15m	98%
Total Compensation	AU$17m	AU$15m	100%

Talking in terms of the industry, salary represented approximately 37% of total compensation out of all the companies we analyzed, while other remuneration made up 63% of the pie. Interestingly, the company has chosen to go down an unconventional route in that it pays a smaller salary to Ruslan Kogan as compared to non-salary compensation over the one-year period examined. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

Kogan.com Ltd's Growth

Over the last three years, Kogan.com Ltd has shrunk its earnings per share by 96% per year. It saw its revenue drop 32% over the last year.

Few shareholders would be pleased to read that EPS have declined. This is compounded by the fact revenue is actually down on last year. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.

Has Kogan.com Ltd Been A Good Investment?

With a total shareholder return of -75% over three years, Kogan.com Ltd shareholders would by and large be disappointed. So shareholders would probably want the company to be less generous with CEO compensation.

To Conclude...

Kogan.com prefers rewarding its CEO through non-salary benefits. Given that shareholders haven't seen any positive returns on their investment, not to mention the lack of earnings growth, this may suggest that few of them would be willing to award the CEO with a pay rise. At the upcoming AGM, they can question the management's plans and strategies to turn performance around and reassess their investment thesis in regards to the company.

If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at Kogan.com.

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. 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.