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In 2009 Zhihong Jia was appointed CEO of Kingold Jewelry, Inc. (NASDAQ:KGJI). First, this article will compare CEO compensation with compensation at similar sized companies. Then we’ll look at a snap shot of the business growth. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This method should give us information to assess how appropriately the company pays the CEO.
How Does Zhihong Jia’s Compensation Compare With Similar Sized Companies?
At the time of writing our data says that Kingold Jewelry, Inc. has a market cap of US$51m, and is paying total annual CEO compensation of US$175k. (This is based on the year to 2017). Notably, the salary of US$175k is the vast majority of the CEO compensation. We examined a group of similar sized companies, with market capitalizations of below US$200m. The median CEO compensation in that group is US$300k.
A first glance this seems like a real positive for shareholders, since Zhihong Jia is paid less than the average compensation paid by similar sized companies. Though positive, it’s important we delve into the performance of the actual business.
The graphic below shows how CEO compensation at Kingold Jewelry has changed from year to year.
Is Kingold Jewelry, Inc. Growing?
Kingold Jewelry, Inc. has increased its earnings per share (EPS) by an average of 17% a year, over the last three years (using a line of best fit). It achieved revenue growth of 46% over the last year.
This shows that the company has improved itself over the last few years. Good news for shareholders. It’s great to see that revenue growth is strong, too. These metrics suggest the business is growing strongly. Although we don’t have analyst forecasts, you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.
Has Kingold Jewelry, Inc. Been A Good Investment?
Given the total loss of 15% over three years, many shareholders in Kingold Jewelry, Inc. are probably rather dissatisfied, to say the least. This suggests it would be unwise for the company to pay the CEO too generously.
It looks like Kingold Jewelry, Inc. pays its CEO less than similar sized companies. Since the business is growing, many would argue this suggests the pay is modest. Unfortunately, some shareholders may be disappointed with their returns, given the company’s performance over the last three years. So while we would not say that Zhihong Jia is generously paid, it would be good to see an improvement in business performance before too an increase in pay.
When I see fairly low remuneration, combined with earnings per share growth, but without big share price gains, it makes me want to research the potential for future gains. Whatever your view on compensation, you might want to check if insiders are buying or selling Kingold Jewelry shares (free trial).
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.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at email@example.com.