How Does Pestech International Berhad's (KLSE:PESTECH) CEO Salary Compare to Peers?

This article will reflect on the compensation paid to Paul Lim who has served as CEO of Pestech International Berhad (KLSE:PESTECH) since 2008. 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 Pestech International Berhad

How Does Total Compensation For Paul Lim Compare With Other Companies In The Industry?

Our data indicates that Pestech International Berhad has a market capitalization of RM807m, and total annual CEO compensation was reported as RM1.9m for the year to June 2020. We note that's an increase of 19% above last year. In particular, the salary of RM1.90m, makes up a huge portion of the total compensation being paid to the CEO.

In comparison with other companies in the industry with market capitalizations ranging from RM407m to RM1.6b, the reported median CEO total compensation was RM1.4m. This suggests that Paul Lim is paid more than the median for the industry. Moreover, Paul Lim also holds RM165m worth of Pestech International Berhad stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

On an industry level, roughly 80% of total compensation represents salary and 20% is other remuneration. Pestech International Berhad pays a high salary, concentrating more on this aspect of compensation in comparison to non-salary pay. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

Pestech International Berhad's Growth

Over the last three years, Pestech International Berhad has shrunk its earnings per share by 21% per year. It saw its revenue drop 1.8% over the last year.

The decline in EPS is a bit concerning. And the fact that revenue is down year on year arguably paints an ugly picture. 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 Pestech International Berhad Been A Good Investment?

Since shareholders would have lost about 37% over three years, some Pestech International Berhad investors would surely be feeling negative emotions. So shareholders would probably want the company to be lessto generous with CEO compensation.

In Summary...

Paul receives almost all of their compensation through a salary. As we noted earlier, Pestech International 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. Add to that declining EPS growth, and you have the perfect recipe for shareholder irritation. Overall, with such poor performance, shareholder's would probably have questions if the company decided to give the CEO a raise.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. In our study, we found 3 warning signs for Pestech International Berhad you should be aware of, and 1 of them is potentially serious.

Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies that have HIGH return on equity and low debt.

If you decide to trade Pestech International Berhad, use the lowest-cost* platform that is rated #1 Overall by Barron’s, Interactive Brokers. Trade stocks, options, futures, forex, bonds and funds on 135 markets, all from a single integrated account. Promoted

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.
^*Interactive Brokers Rated Lowest Cost Broker by StockBrokers.com Annual Online Review 2020

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.