Is Destini Berhad's (KLSE:DESTINI) CEO Pay Justified?

Rozabil Bin Abdul Rahman has been the CEO of Destini Berhad (KLSE:DESTINI) since 2014. First, this article will compare CEO compensation with compensation at similar sized companies. Then we'll look at a snap shot of the business growth. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. The aim of all this is to consider the appropriateness of CEO pay levels.

See our latest analysis for Destini Berhad

How Does Rozabil Bin Abdul Rahman's Compensation Compare With Similar Sized Companies?

At the time of writing, our data says that Destini Berhad has a market cap of RM160m, and reported total annual CEO compensation of RM1.2m for the year to December 2018. It is worth noting that the CEO compensation consists almost entirely of the salary, worth RM1.2m. We took a group of companies with market capitalizations below RM855m, and calculated the median CEO total compensation to be RM627k.

Now let's take a look at the pay mix on an industry and company level to gain a better understanding of where Destini Berhad stands. Talking in terms of the sector, salary represented approximately 61% of total compensation out of all the companies we analysed, while other remuneration made up 39% of the pie. At the company level, Destini Berhad pays Rozabil Bin Abdul Rahman solely through a salary, preferring to go down a conventional route.

As you can see, Rozabil Bin Abdul Rahman is paid more than the median CEO pay at companies of a similar size, in the same market. However, this does not necessarily mean Destini Berhad is paying too much. We can better assess whether the pay is overly generous by looking into the underlying business performance. You can see a visual representation of the CEO compensation at Destini Berhad, below.

Is Destini Berhad Growing?

Over the last three years Destini Berhad has shrunk its earnings per share by an average of 129% per year (measured with a line of best fit). In the last year, its revenue is down 29%.

Few shareholders would be pleased to read that earnings per share are lower over three years. And the fact that revenue is down year on year arguably paints an ugly picture. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Shareholders might be interested in this free visualization of analyst forecasts.

Has Destini Berhad Been A Good Investment?

Since shareholders would have lost about 82% over three years, some Destini Berhad shareholders would surely be feeling negative emotions. It therefore might be upsetting for shareholders if the CEO were paid generously.

In Summary...

We compared the total CEO remuneration paid by Destini Berhad, and compared it to remuneration at a group of similar sized companies. Our data suggests that it pays above the median CEO pay within that group.

We think many shareholders would be underwhelmed with the business growth over the last three years. Over the same period, investors would have come away with nothing in the way of share price gains. This analysis suggests to us that the CEO is paid too generously! CEO compensation is an important area to keep your eyes on, but we've also identified 4 warning signs for Destini Berhad (1 is a bit concerning!) that you should be aware of before investing here.

Important note: Destini Berhad 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.