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Shareholders May Be A Bit More Conservative With KNeoMedia Limited's (ASX:KNM) CEO Compensation For Now

Key Insights

  • KNeoMedia will host its Annual General Meeting on 16th of November

  • Total pay for CEO James Kellett includes AU$287.7k salary

  • Total compensation is similar to the industry average

  • Over the past three years, KNeoMedia's EPS grew by 26% and over the past three years, the total loss to shareholders 91%

Shareholders of KNeoMedia Limited (ASX:KNM) will have been dismayed by the negative share price return over the last three years. Despite positive EPS growth in the past few years, the share price hasn't tracked the fundamental performance of the company. Shareholders may want to question the board on the future direction of the company at the upcoming AGM on 16th of November. They could also try to influence management and firm direction through voting on resolutions such as executive remuneration and other company matters. We think shareholders might be reluctant to increase compensation for the CEO at the moment, according to our analysis below.

Check out our latest analysis for KNeoMedia

Comparing KNeoMedia Limited's CEO Compensation With The Industry

According to our data, KNeoMedia Limited has a market capitalization of AU$3.0m, and paid its CEO total annual compensation worth AU$315k over the year to June 2023. That is, the compensation was roughly the same as last year. We note that the salary portion, which stands at AU$287.7k constitutes the majority of total compensation received by the CEO.

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On comparing similar-sized companies in the Australia Entertainment industry with market capitalizations below AU$315m, we found that the median total CEO compensation was AU$298k. So it looks like KNeoMedia compensates James Kellett in line with the median for the industry.

Component

2023

2022

Proportion (2023)

Salary

AU$288k

AU$288k

91%

Other

AU$28k

AU$24k

9%

Total Compensation

AU$315k

AU$311k

100%

On an industry level, roughly 63% of total compensation represents salary and 37% is other remuneration. KNeoMedia is paying a higher share of its remuneration through a salary in comparison to the overall industry. 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.

ceo-compensation
ceo-compensation

KNeoMedia Limited's Growth

KNeoMedia Limited's earnings per share (EPS) grew 26% per year over the last three years. In the last year, its revenue is up 242%.

Shareholders would be glad to know that the company has improved itself over the last few years. Most shareholders would be pleased to see strong revenue growth combined with EPS growth. This combo suggests a fast growing business. While we don't have analyst forecasts for the company, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.

Has KNeoMedia Limited Been A Good Investment?

Few KNeoMedia Limited shareholders would feel satisfied with the return of -91% over three years. So shareholders would probably want the company to be less generous with CEO compensation.

To Conclude...

Despite the growth in its earnings, the share price decline in the past three years is certainly concerning. A huge lag in share price growth when earnings have grown may indicate there could be other issues that are affecting the company at the moment that the market is focused on. If there are some unknown variables that are influencing the stock's price, surely shareholders would have some concerns. The upcoming AGM will be a chance for shareholders to question the board on key matters, such as CEO remuneration or any other issues they might have and revisit their investment thesis with regards to the company.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. We did our research and identified 6 warning signs (and 5 which don't sit too well with us) in KNeoMedia we think you should know about.

Important note: KNeoMedia is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.