In 2013, Jianhua Gu was appointed CEO of Kinetic Mines and Energy Limited (HKG:1277). First, this article will compare CEO compensation with compensation at similar sized companies. After that, we will consider the growth in the business. 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 Jianhua Gu's Compensation Compare With Similar Sized Companies?
According to our data, Kinetic Mines and Energy Limited has a market capitalization of HK$2.9b, and paid its CEO total annual compensation worth CN¥1.1m over the year to December 2019. That's actually a decrease on the year before. We think total compensation is more important but we note that the CEO salary is lower, at CN¥780k. We examined companies with market caps from CN¥1.4b to CN¥5.7b, and discovered that the median CEO total compensation of that group was CN¥2.7m.
Pay mix tells us a lot about how a company functions versus the wider industry, and it's no different in the case of Kinetic Mines and Energy. On an industry level, roughly 86% of total compensation represents salary and 14% is other remuneration. Kinetic Mines and Energy is largely mirroring the industry average when it comes to the share a salary enjoys in overall compensation
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 Kinetic Mines and Energy has changed from year to year.
Is Kinetic Mines and Energy Limited Growing?
Over the last three years Kinetic Mines and Energy Limited has seen earnings per share (EPS) move in a positive direction by an average of 37% per year (using a line of best fit). In the last year, its revenue is up 12%.
This demonstrates that the company has been improving recently. A good result. This sort of respectable year-on-year revenue growth is often seen at a healthy, growing business. Although we don't have analyst forecasts you might want to assess this data-rich visualization of earnings, revenue and cash flow.
Has Kinetic Mines and Energy Limited Been A Good Investment?
Kinetic Mines and Energy Limited has served shareholders reasonably well, with a total return of 27% over three years. But they would probably prefer not to see CEO compensation far in excess of the median.
Kinetic Mines and Energy Limited is currently paying its CEO below what is normal for companies of its size.
Many would consider this to indicate that the pay is modest since the business is growing. While some might be keen on seeing higher returns, our short analysis has not produced any evidence to suggest Jianhua Gu is overcompensated. It's great to see a company that pays its CEO reasonably, even while growing. It would be an additional positive if insiders are buying shares. Moving away from CEO compensation for the moment, we've identified 1 warning sign for Kinetic Mines and Energy that you should be aware of before investing.
Important note: Kinetic Mines and Energy may not be the best stock to buy. You might find something better in this list of interesting companies with high ROE and low debt.
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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. Thank you for reading.