How Should Investors React To Love Group Global's (ASX:LVE) CEO Pay?

Michael Ye has been the CEO of Love Group Global Ltd (ASX:LVE) since 2016, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also assess whether Love Group Global pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

View our latest analysis for Love Group Global

Comparing Love Group Global Ltd's CEO Compensation With the industry

According to our data, Love Group Global Ltd has a market capitalization of AU$3.6m, and paid its CEO total annual compensation worth AU$265k over the year to June 2020. We note that's a decrease of 24% compared to last year. In particular, the salary of AU$261.4k, makes up a huge portion of the total compensation being paid to the CEO.

In comparison with other companies in the industry with market capitalizations under AU$261m, the reported median total CEO compensation was AU$334k. This suggests that Love Group Global remunerates its CEO largely in line with the industry average. Furthermore, Michael Ye directly owns AU$792k worth of shares in the company, implying that they are deeply invested in the company's success.

Speaking on an industry level, nearly 60% of total compensation represents salary, while the remainder of 40% is other remuneration. Investors will find it interesting that Love Group Global pays the bulk of its rewards through a traditional salary, instead of non-salary benefits. 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 Love Group Global Ltd's Growth Numbers

Over the past three years, Love Group Global Ltd has seen its earnings per share (EPS) grow by 85% per year. It saw its revenue drop 34% over the last year.

Shareholders would be glad to know that the company has improved itself over the last few 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 Love Group Global Ltd Been A Good Investment?

With a three year total loss of 16% for the shareholders, Love Group Global Ltd would certainly have some dissatisfied shareholders. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

In Summary...

Michael receives almost all of their compensation through a salary. As we noted earlier, Love Group Global pays its CEO in line with similar-sized companies belonging to the same industry. Meanwhile, shareholder returns paint a sorry picture for the company, finishing in the red over the last three years. However, EPS growth is positive over the same time frame. Considering positive EPS growth, we'd say compensation is fair, but shareholders may be wary of a bump in pay before the company logs positive returns.

CEO pay is simply one of the many factors that need to be considered while examining business performance. In our study, we found 3 warning signs for Love Group Global you should be aware of, and 1 of them shouldn't be ignored.

Switching gears from Love Group Global, 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. 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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