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Is Kogan.com Ltd's (ASX:KGN) CEO Pay Justified?

Simply Wall St

Ruslan Kogan has been the CEO of Kogan.com Ltd (ASX:KGN) since 2006. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. Next, we'll consider growth that the business demonstrates. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. This process should give us an idea about how appropriately the CEO is paid.

View our latest analysis for Kogan.com

How Does Ruslan Kogan's Compensation Compare With Similar Sized Companies?

At the time of writing, our data says that Kogan.com Ltd has a market cap of AU$392m, and reported total annual CEO compensation of AU$439k for the year to June 2019. We think total compensation is more important but we note that the CEO salary is lower, at AU$385k. As part of our analysis we looked at companies in the same jurisdiction, with market capitalizations of AU$153m to AU$614m. The median total CEO compensation was AU$846k.

This would give shareholders a good impression of the company, since most similar size companies have to pay more, leaving less for shareholders. While this is a good thing, you'll need to understand the business better before you can form an opinion.

The graphic below shows how CEO compensation at Kogan.com has changed from year to year.

ASX:KGN CEO Compensation, March 13th 2020

Is Kogan.com Ltd Growing?

On average over the last three years, Kogan.com Ltd has grown earnings per share (EPS) by 53% each year (using a line of best fit). It saw its revenue drop 1.9% over the last year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. Revenue growth is a real positive for growth, but ultimately profits are more important. Shareholders might be interested in this free visualization of analyst forecasts.

Has Kogan.com Ltd Been A Good Investment?

Boasting a total shareholder return of 144% over three years, Kogan.com Ltd has done well by shareholders. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.

In Summary...

It appears that Kogan.com Ltd remunerates its CEO below most similar sized companies.

Considering the underlying business is growing earnings, this would suggest the pay is modest. And given most shareholders are probably very happy with recent returns, you might even think that Ruslan Kogan deserves a raise! It is relatively rare to see a modestly paid CEO when performance is so impressive. It would be even more positive if company insiders are buying shares. Looking into other areas, we've picked out 2 warning signs for Kogan.com that investors should think about before committing capital to this stock.

If you want to buy a stock that is better than Kogan.com, this free list of high return, low debt companies is a great place to look.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.