Here's Why Shareholders Should Examine Kim Hin Industry Berhad's (KLSE:KIMHIN) CEO Compensation Package More Closely

Simply Wall St
June 08, 2021
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Kim Hin Industry Berhad (KLSE:KIMHIN) has not performed well recently and CEO John Chua will probably need to up their game. Shareholders will be interested in what the board will have to say about turning performance around at the next AGM on 15 June 2021. This will be also be a chance where they can challenge the board on company direction and vote on resolutions such as executive remuneration. The data we present below explains why we think CEO compensation is not consistent with recent performance.

Check out our latest analysis for Kim Hin Industry Berhad

How Does Total Compensation For John Chua Compare With Other Companies In The Industry?

At the time of writing, our data shows that Kim Hin Industry Berhad has a market capitalization of RM118m, and reported total annual CEO compensation of RM2.0m for the year to December 2020. That's a notable decrease of 15% on last year. We note that the salary of RM1.15m makes up a sizeable portion of the total compensation received by the CEO.

In comparison with other companies in the industry with market capitalizations under RM825m, the reported median total CEO compensation was RM493k. Accordingly, our analysis reveals that Kim Hin Industry Berhad pays John Chua north of the industry median. What's more, John Chua holds RM441k worth of shares in the company in their own name.

Component20202019Proportion (2020)
Salary RM1.1m RM1.1m 56%
Other RM885k RM1.2m 44%
Total CompensationRM2.0m RM2.4m100%

Talking in terms of the industry, salary represented approximately 83% of total compensation out of all the companies we analyzed, while other remuneration made up 17% of the pie. Kim Hin Industry Berhad sets aside a smaller share of compensation for salary, in comparison to the overall industry. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

KLSE:KIMHIN CEO Compensation June 8th 2021

A Look at Kim Hin Industry Berhad's Growth Numbers

Over the last three years, Kim Hin Industry Berhad has shrunk its earnings per share by 48% per year. In the last year, its revenue is down 3.4%.

Few shareholders would be pleased to read that EPS have declined. 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. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Kim Hin Industry Berhad Been A Good Investment?

Few Kim Hin Industry Berhad shareholders would feel satisfied with the return of -33% over three years. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

In Summary...

Given that shareholders haven't seen any positive returns on their investment, not to mention the lack of earnings growth, this may suggest that few of them would be willing to award the CEO with a pay rise. At the upcoming AGM, management will get a chance to explain how they plan to get the business back on track and address the concerns from investors.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. That's why we did some digging and identified 2 warning signs for Kim Hin Industry Berhad that investors should think about before committing capital to this stock.

Important note: Kim Hin Industry 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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