Kay Tan has been the CEO of Johan Holdings Berhad (KLSE:JOHAN) since 1981, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Johan Holdings Berhad.
See our latest analysis for Johan Holdings Berhad
How Does Total Compensation For Kay Tan Compare With Other Companies In The Industry?
Our data indicates that Johan Holdings Berhad has a market capitalization of RM179m, and total annual CEO compensation was reported as RM682k for the year to January 2020. That's a notable decrease of 27% on last year. Notably, the salary which is RM596.0k, represents most of the total compensation being paid.
On comparing similar-sized companies in the industry with market capitalizations below RM811m, we found that the median total CEO compensation was RM132k. Accordingly, our analysis reveals that Johan Holdings Berhad pays Kay Tan north of the industry median.
| Component | 2020 | 2019 | Proportion (2020) |
| Salary | RM596k | RM738k | 87% |
| Other | RM86k | RM192k | 13% |
| Total Compensation | RM682k | RM930k | 100% |
On an industry level, around 96% of total compensation represents salary and 4.1% is other remuneration. Our data reveals that Johan Holdings Berhad allocates salary more or less in line with the wider market. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.
A Look at Johan Holdings Berhad's Growth Numbers
Over the last three years, Johan Holdings Berhad has shrunk its earnings per share by 38% per year. Its revenue is down 19% over the previous 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. While we don't have analyst forecasts for the company, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.
Has Johan Holdings Berhad Been A Good Investment?
With a three year total loss of 34% for the shareholders, Johan Holdings Berhad would certainly have some dissatisfied shareholders. This suggests it would be unwise for the company to pay the CEO too generously.
To Conclude...
As previously discussed, Kay is compensated more than what is normal for CEOs of companies of similar size, and which belong to the same industry. Disappointingly, share price gains over the last three years have failed to materialize. Add to that declining EPS growth, and you have the perfect recipe for shareholder irritation. Understandably, the company's shareholders might have some questions about the CEO's remuneration, given the disappointing performance.
CEO pay is simply one of the many factors that need to be considered while examining business performance. We identified 4 warning signs for Johan Holdings Berhad (1 is a bit concerning!) that you should be aware of before investing here.
Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.
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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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About KLSE:JOHAN
Johan Holdings Berhad
An investment holding company, engages in the general trading; property, hospitality and card, secretarial, and healthcare businesses in Malaysia.
Excellent balance sheet slight.
