Is KOR overpaying the CEO?
Though one size does not fit all, since compensation should be tailored to the specific company and market, we can gauge a high-level thresold to see if KOR is an outlier. This outcome helps investors ask the right question about Karpinski’s incentive alignment. Normally, an Australian small-cap is worth around $140M, creates earnings of $10M, and remunerates its CEO circa $500,000 per year. Typically I’d use market cap and profit as factors determining performance, however, KOR’s negative earnings lower the usefulness of my formula. Given the range of pay for small-cap executives, it seems like Karpinski is being paid within the bounds of reasonableness. Overall, although KOR is loss-making, it seems like the CEO’s pay is reflective of the appropriate level.
Next Steps:
You can breathe easy knowing that shareholder funds aren’t being used to overpay KOR’s CEO. However, on the flipside, you should ask whether Karpinski is appropriately remunerated on the basis of retention. Its important for shareholders to be active in voting governance decisions, as board members are only representatives of investors’ voices. If you have not done so already, I urge you to complete your research by taking a look at the following:
- Governance: To find out more about KOR’s governance, look through our infographic report of the company’s board and management.
- Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of KOR? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
To help readers see pass 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.