What Can We Make Of Mongolian Mining's (HKG:975) CEO Compensation?

Battsengel Gotov became the CEO of Mongolian Mining Corporation (HKG:975) in 2008, 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 look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Mongolian Mining.

Check out our latest analysis for Mongolian Mining

How Does Total Compensation For Battsengel Gotov Compare With Other Companies In The Industry?

According to our data, Mongolian Mining Corporation has a market capitalization of HK$504m, and paid its CEO total annual compensation worth US$1.1m over the year to December 2019. Notably, that's an increase of 16% over the year before. In particular, the salary of US$867.0k, makes up a huge portion of the total compensation being paid to the CEO.

For comparison, other companies in the industry with market capitalizations below HK$1.6b, reported a median total CEO compensation of US$139k. Hence, we can conclude that Battsengel Gotov is remunerated higher than the industry median.

Talking in terms of the industry, salary represented approximately 86% of total compensation out of all the companies we analyzed, while other remuneration made up 14% of the pie. Mongolian Mining is largely mirroring the industry average when it comes to the share a salary enjoys in overall compensation. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

A Look at Mongolian Mining Corporation's Growth Numbers

Over the last three years, Mongolian Mining Corporation has shrunk its earnings per share by 39% per year. Its revenue is down 29% over the previous 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. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Mongolian Mining Corporation Been A Good Investment?

With a three year total loss of 77% for the shareholders, Mongolian Mining Corporation would certainly have some dissatisfied shareholders. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

As previously discussed, Battsengel is compensated more than what is normal for CEOs of companies of similar size, and which belong to the same industry. Unfortunately, this doesn't look great when you see shareholder returns have been negative over the last three years. To make matters worse, EPS growth has also been negative during this period. Understandably, the company's shareholders might have some questions about the CEO's remuneration, given the disappointing performance.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. We did our research and identified 3 warning signs (and 1 which is a bit concerning) in Mongolian Mining we think you should know about.

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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