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Performance at Jerash Holdings (US), Inc. (NASDAQ:JRSH) has been rather uninspiring recently and shareholders may be wondering how CEO Sam Choi plans to fix this. At the next AGM coming up on 15 September 2021, they can influence managerial decision making through voting on resolutions, including executive remuneration. Voting on executive pay could be a powerful way to influence management, as studies have shown that the right compensation incentives impact company performance. In our opinion, CEO compensation does not look excessive and we discuss why.
How Does Total Compensation For Sam Choi Compare With Other Companies In The Industry?
According to our data, Jerash Holdings (US), Inc. has a market capitalization of US$87m, and paid its CEO total annual compensation worth US$280k over the year to March 2021. That's slightly lower by 6.7% over the previous year. Notably, the salary of US$280k is the entirety of the CEO compensation.
On comparing similar-sized companies in the industry with market capitalizations below US$200m, we found that the median total CEO compensation was US$596k. Accordingly, Jerash Holdings (US) pays its CEO under the industry median. What's more, Sam Choi holds US$33m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.
Talking in terms of the industry, salary represented approximately 23% of total compensation out of all the companies we analyzed, while other remuneration made up 77% of the pie. At the company level, Jerash Holdings (US) pays Sam Choi solely through a salary, preferring to go down a conventional route. 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.
Jerash Holdings (US), Inc.'s Growth
Over the last three years, Jerash Holdings (US), Inc. has shrunk its earnings per share by 8.3% per year. Its revenue is up 14% over the last year.
The decline in EPS is a bit concerning. And while it's good to see some good revenue growth recently, the growth isn't really fast enough for us to put aside my concerns around EPS. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.
Has Jerash Holdings (US), Inc. Been A Good Investment?
Most shareholders would probably be pleased with Jerash Holdings (US), Inc. for providing a total return of 44% over three years. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.
Jerash Holdings (US) rewards its CEO solely through a salary, ignoring non-salary benefits completely. While the return to shareholders does look promising, it's hard to ignore the lack of earnings growth and this makes us wonder if these strong returns can continue. These concerns could be addressed to the board and shareholders should revisit their investment thesis to see if it still makes sense.
It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. In our study, we found 3 warning signs for Jerash Holdings (US) you should be aware of, and 1 of them shouldn't be ignored.
Switching gears from Jerash Holdings (US), 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. 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.
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