Stock Analysis

How Is Gamuda Berhad's (KLSE:GAMUDA) CEO Paid Relative To Peers?

KLSE:GAMUDA
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Yun Lin has been the CEO of Gamuda Berhad (KLSE:GAMUDA) since 1981, 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.

View our latest analysis for Gamuda Berhad

How Does Total Compensation For Yun Lin Compare With Other Companies In The Industry?

At the time of writing, our data shows that Gamuda Berhad has a market capitalization of RM8.4b, and reported total annual CEO compensation of RM5.7m for the year to July 2020. We note that's a small decrease of 6.1% on last year. Notably, the salary which is RM5.41m, represents most of the total compensation being paid.

On comparing similar companies from the same industry with market caps ranging from RM4.1b to RM13b, we found that the median CEO total compensation was RM1.9m. Accordingly, our analysis reveals that Gamuda Berhad pays Yun Lin north of the industry median. Moreover, Yun Lin also holds RM254m worth of Gamuda Berhad stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component20202019Proportion (2020)
Salary RM5.4m RM5.9m 95%
Other RM291k RM225k 5%
Total CompensationRM5.7m RM6.1m100%

On an industry level, roughly 80% of total compensation represents salary and 20% is other remuneration. Gamuda Berhad pays out 95% of remuneration in the form of a salary, significantly higher than the industry average. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.

ceo-compensation
KLSE:GAMUDA CEO Compensation March 2nd 2021

Gamuda Berhad's Growth

Over the last three years, Gamuda Berhad has shrunk its earnings per share by 22% per year. It saw its revenue drop 30% over the last year.

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. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.

Has Gamuda Berhad Been A Good Investment?

Given the total shareholder loss of 28% over three years, many shareholders in Gamuda Berhad are probably rather dissatisfied, to say the least. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

As previously discussed, Yun is compensated more than what is normal for CEOs of companies of similar size, and which belong 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.

CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. We identified 3 warning signs for Gamuda Berhad (1 is a bit unpleasant!) that you should be aware of before investing here.

Switching gears from Gamuda Berhad, 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.

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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.
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