Kok Onn has been the CEO of Gadang Holdings Berhad (KLSE:GADANG) since 1997, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.
How Does Total Compensation For Kok Onn Compare With Other Companies In The Industry?
Our data indicates that Gadang Holdings Berhad has a market capitalization of RM324m, and total annual CEO compensation was reported as RM1.6m for the year to May 2020. This means that the compensation hasn't changed much from last year. In particular, the salary of RM1.46m, makes up a huge portion of the total compensation being paid to the CEO.
For comparison, other companies in the industry with market capitalizations below RM810m, reported a median total CEO compensation of RM935k. Hence, we can conclude that Kok Onn is remunerated higher than the industry median. Furthermore, Kok Onn directly owns RM44m worth of shares in the company, implying that they are deeply invested in the company's success.
Speaking on an industry level, nearly 79% of total compensation represents salary, while the remainder of 21% is other remuneration. Gadang Holdings Berhad pays out 92% of remuneration in the form of a salary, significantly higher than the industry average. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.
Gadang Holdings Berhad's Growth
Gadang Holdings Berhad has reduced its earnings per share by 44% a year over the last three years. Its revenue is down 9.3% over the previous year.
Few shareholders would be pleased to read that EPS have declined. And the impression is worse when you consider revenue is down year-on-year. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..
Has Gadang Holdings Berhad Been A Good Investment?
With a three year total loss of 56% for the shareholders, Gadang Holdings Berhad would certainly have some dissatisfied shareholders. So shareholders would probably want the company to be lessto generous with CEO compensation.
As we noted earlier, Gadang Holdings Berhad pays its CEO higher than the norm for similar-sized companies belonging to the same industry. Unfortunately, this doesn't look great when you see shareholder returns have been negative over the last three years. Arguably worse, we've been waiting for positive EPS growth for the last three years. Understandably, the company's shareholders might have some questions about the CEO's remuneration, given the disappointing performance.
We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. We did our research and identified 4 warning signs (and 1 which is significant) in Gadang Holdings Berhad we think you should know about.
Important note: Gadang Holdings Berhad is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.
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Gadang Holdings Berhad
Gadang Holdings Berhad, an investment holding company, engages in civil engineering and construction, property development, water supply, and mechanical and electrical engineering businesses in Malaysia, Indonesia, and Singapore.
Flawless balance sheet with reasonable growth potential.