This post was originally published on this site

View photos

Don Charron has been the CEO of Kimball Electronics, Inc. (NASDAQ:KE) since 2014, and this article will examine the executive’s compensation with respect to the overall performance of the company. This analysis will also assess whether Kimball Electronics pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

Check out our latest analysis for Kimball Electronics

Comparing Kimball Electronics, Inc.’s CEO Compensation With the industry

According to our data, Kimball Electronics, Inc. has a market capitalization of US$305m, and paid its CEO total annual compensation worth US$1.8m over the year to June 2020. Notably, that’s a decrease of 23% over the year before. We think total compensation is more important but our data shows that the CEO salary is lower, at US$710k.

In comparison with other companies in the industry with market capitalizations ranging from US$200m to US$800m, the reported median CEO total compensation was US$2.4m. From this we gather that Don Charron is paid around the median for CEOs in the industry. Moreover, Don Charron also holds US$5.5m worth of Kimball Electronics stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component 2020 2019 Proportion (2020)
Salary US$710k US$696k 40%
Other US$1.1m US$1.6m 60%
Total Compensation US$1.8m US$2.3m 100%

Speaking on an industry level, nearly 33% of total compensation represents salary, while the remainder of 67% is other remuneration. It’s interesting to note that Kimball Electronics pays out a greater portion of remuneration through salary, compared to the industry. If non-salary compensation dominates total pay, it’s an indicator that the executive’s salary is tied to company performance.

ceo-compensation

Kimball Electronics, Inc.’s Growth

Kimball Electronics, Inc. has reduced its earnings per share by 17% a year over the last three years. Its revenue is up 1.5% over the last year.

The decline in EPS is a bit concerning. The modest increase in revenue in the last year isn’t enough to make us overlook the disappointing change in EPS. It’s hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. 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 Kimball Electronics, Inc. Been A Good Investment?

Since shareholders would have lost about 38% over three years, some Kimball Electronics, Inc. investors would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude…

As we noted earlier, Kimball Electronics pays its CEO in line with similar-sized companies belonging to the same industry. On the other hand, EPS growth and total shareholder return have been negative for the last three years. It’s tough to call out the compensation as inappropriate, but shareholders might not favor a raise before company performance improves.

While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. We’ve identified 2 warning signs for Kimball Electronics that investors should be aware of in a dynamic business environment.

Switching gears from Kimball Electronics, 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. 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com.