We Think Kogan.com Ltd's (ASX:KGN) CEO Compensation Package Needs To Be Put Under A Microscope
Key Insights
Kogan.com's Annual General Meeting to take place on 22nd of November
CEO Ruslan Kogan's total compensation includes salary of AU$423.5k
The total compensation is 2,855% higher than the average for the industry
Over the past three years, Kogan.com's EPS fell by 96% and over the past three years, the total loss to shareholders 75%
Kogan.com Ltd (ASX:KGN) has not performed well recently and CEO Ruslan Kogan will probably need to up their game. At the upcoming AGM on 22nd of November, shareholders can hear from the board including their plans for turning around performance. They will also get a chance to influence managerial decision-making through voting on resolutions such as executive remuneration, which may impact firm value in the future. We present the case why we think CEO compensation is out of sync with company performance.
See our latest analysis for Kogan.com
Comparing Kogan.com Ltd's CEO Compensation With The Industry
According to our data, Kogan.com Ltd has a market capitalization of AU$486m, and paid its CEO total annual compensation worth AU$17m over the year to June 2023. Notably, that's an increase of 13% over the year before. While we always look at total compensation first, our analysis shows that the salary component is less, at AU$424k.
On comparing similar companies from the Australian Multiline Retail industry with market caps ranging from AU$306m to AU$1.2b, we found that the median CEO total compensation was AU$581k. Hence, we can conclude that Ruslan Kogan is remunerated higher than the industry median. Furthermore, Ruslan Kogan directly owns AU$75m worth of shares in the company, implying that they are deeply invested in the company's success.
Component | 2023 | 2022 | Proportion (2023) |
Salary | AU$424k | AU$424k | 2% |
Other | AU$17m | AU$15m | 98% |
Total Compensation | AU$17m | AU$15m | 100% |
On an industry level, around 37% of total compensation represents salary and 63% is other remuneration. A high-salary is usually a no-brainer when it comes to attracting the best executives, but Kogan.com paid Ruslan Kogan a nominal salary to the CEO over the past 12 months, instead focusing on non-salary compensation. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.
Kogan.com Ltd's Growth
Kogan.com Ltd has reduced its earnings per share by 96% a year over the last three years. In the last year, its revenue is down 32%.
Overall this is not a very positive result for shareholders. This is compounded by the fact revenue is actually down on last year. These factors suggest that the business performance wouldn't really justify a high pay packet 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 Kogan.com Ltd Been A Good Investment?
Few Kogan.com Ltd shareholders would feel satisfied with the return of -75% over three years. Therefore, it might be upsetting for shareholders if the CEO were paid generously.
To Conclude...
Kogan.com primarily uses non-salary benefits to reward its CEO. Along with the business performing poorly, shareholders have suffered with poor share price returns on their investments, suggesting that there's little to no chance of them being in favor of a CEO pay raise. At the upcoming AGM, they can question the management's plans and strategies to turn performance around and reassess their investment thesis in regards to the company.
If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at Kogan.com.
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.
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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.
