How Is Poh Kong Holdings Berhad's (KLSE:POHKONG) CEO Paid Relative To Peers?

Eddie Choon has been the CEO of Poh Kong Holdings Berhad (KLSE:POHKONG) since 2004, 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.

See our latest analysis for Poh Kong Holdings Berhad

Comparing Poh Kong Holdings Berhad's CEO Compensation With the industry

At the time of writing, our data shows that Poh Kong Holdings Berhad has a market capitalization of RM343m, and reported total annual CEO compensation of RM2.7m for the year to July 2020. That's just a smallish increase of 4.0% on last year. In particular, the salary of RM2.06m, 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 under RM811m, the reported median total CEO compensation was RM380k. Hence, we can conclude that Eddie Choon is remunerated higher than the industry median. Furthermore, Eddie Choon directly owns RM9.4m worth of shares in the company, implying that they are deeply invested in the company's success.

Talking in terms of the industry, salary represented approximately 81% of total compensation out of all the companies we analyzed, while other remuneration made up 19% of the pie. There isn't a significant difference between Poh Kong Holdings Berhad and the broader market, in terms of salary allocation in the overall compensation package. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

Poh Kong Holdings Berhad's Growth

Over the last three years, Poh Kong Holdings Berhad has shrunk its earnings per share by 2.2% per year. It saw its revenue drop 19% over the last year.

The lack of EPS growth is certainly unimpressive. And the impression is worse when you consider revenue is down year-on-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 Poh Kong Holdings Berhad Been A Good Investment?

We think that the total shareholder return of 38%, over three years, would leave most Poh Kong Holdings Berhad shareholders smiling. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.

To Conclude...

As previously discussed, Eddie is compensated more than what is normal for CEOs of companies of similar size, and which belong to the same industry. We're not seeing great strides in EPS, but the company has clearly pleased some investors, given the returns over the last three years. Considering positive investor returns, it would be bold of us to criticize CEO compensation, but shareholders might want to see healthier EPS growth before a raise is given out.

CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. That's why we did some digging and identified 2 warning signs for Poh Kong Holdings Berhad that investors should think about before committing capital to this stock.

Important note: Poh Kong 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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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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