How Should Investors Feel About LFE Corporation Berhad's (KLSE:LFECORP) CEO Remuneration?

By
Simply Wall St
Published
September 14, 2020
KLSE:LFECORP
Source: Shutterstock

Kenneth Liew became the CEO of LFE Corporation Berhad (KLSE:LFECORP) in 2010, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. This analysis will also assess whether LFE Corporation Berhad pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

See our latest analysis for LFE Corporation Berhad

How Does Total Compensation For Kenneth Liew Compare With Other Companies In The Industry?

Our data indicates that LFE Corporation Berhad has a market capitalization of RM46m, and total annual CEO compensation was reported as RM386k for the year to December 2019. That's a notable decrease of 27% on last year. Notably, the salary which is RM339.0k, represents most of the total compensation being paid.

For comparison, other companies in the industry with market capitalizations below RM831m, reported a median total CEO compensation of RM854k. This suggests that Kenneth Liew is paid below the industry median. Furthermore, Kenneth Liew directly owns RM3.5m worth of shares in the company, implying that they are deeply invested in the company's success.

Component20192018Proportion (2019)
Salary RM339k RM493k 88%
Other RM47k RM38k 12%
Total CompensationRM386k RM531k100%

Talking in terms of the industry, salary represented approximately 79% of total compensation out of all the companies we analyzed, while other remuneration made up 21% of the pie. LFE Corporation Berhad pays out 88% 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:LFECORP CEO Compensation September 14th 2020

LFE Corporation Berhad's Growth

LFE Corporation Berhad has seen its earnings per share (EPS) increase by 51% a year over the past three years. In the last year, its revenue is up 69%.

This demonstrates that the company has been improving recently and is good news for the shareholders. The combination of strong revenue growth with medium-term EPS improvement certainly points to the kind of growth we like to see. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has LFE Corporation Berhad Been A Good Investment?

Since shareholders would have lost about 20% over three years, some LFE Corporation Berhad investors would surely be feeling negative emotions. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

To Conclude...

As we touched on above, LFE Corporation Berhad is currently paying its CEO below the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. However we must not forget that the EPS growth has been very strong over three years. Considering EPS are on the up, we would say Kenneth is compensated fairly. But we believe shareholders would want to see healthier returns before the CEO gets a raise.

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 did our research and identified 5 warning signs (and 2 which are concerning) in LFE Corporation Berhad we think you should know about.

Important note: LFE Corporation 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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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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