Joshua Zhou has been the CEO of AuMake International Limited (ASX:AU8) since 2017, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for AuMake International.
Comparing AuMake International Limited's CEO Compensation With the industry
At the time of writing, our data shows that AuMake International Limited has a market capitalization of AU$29m, and reported total annual CEO compensation of AU$247k for the year to June 2020. We note that's a decrease of 17% compared to last year. In particular, the salary of AU$227.6k, 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 AU$279m, reported a median total CEO compensation of AU$702k. In other words, AuMake International pays its CEO lower than the industry median. Furthermore, Joshua Zhou directly owns AU$3.1m worth of shares in the company, implying that they are deeply invested in the company's success.
On an industry level, roughly 62% of total compensation represents salary and 38% is other remuneration. According to our research, AuMake International has allocated a higher percentage of pay to salary in comparison to the wider industry. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.
A Look at AuMake International Limited's Growth Numbers
AuMake International Limited has seen its earnings per share (EPS) increase by 26% a year over the past three years. In the last year, its revenue is up 38%.
This demonstrates that the company has been improving recently and is good news for the shareholders. It's great to see that revenue growth is strong, too. These metrics suggest the business is growing strongly. We don't have analyst forecasts, but you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.
Has AuMake International Limited Been A Good Investment?
Given the total shareholder loss of 67% over three years, many shareholders in AuMake International Limited are probably rather dissatisfied, to say the least. This suggests it would be unwise for the company to pay the CEO too generously.
As we touched on above, AuMake International Limited is currently paying its CEO below the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. However we must not forget that the EPS growth has been very strong over three years. Although we would've liked to see positive investor returns, it would be bold of us to criticize CEO compensation when EPS are up. 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. That's why we did some digging and identified 3 warning signs for AuMake International that investors should think about before committing capital to this stock.
Switching gears from AuMake International, 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.
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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