How Should Investors Feel About Kim Loong Resources Berhad's (KLSE:KMLOONG) CEO Remuneration?

Seong Gooi has been the CEO of Kim Loong Resources Berhad (KLSE:KMLOONG) since 2006, 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.

Check out our latest analysis for Kim Loong Resources Berhad

Comparing Kim Loong Resources Berhad's CEO Compensation With the industry

According to our data, Kim Loong Resources Berhad has a market capitalization of RM1.4b, and paid its CEO total annual compensation worth RM1.4m over the year to January 2020. That's mostly flat as compared to the prior year's compensation. We think total compensation is more important but our data shows that the CEO salary is lower, at RM576k.

On comparing similar companies from the same industry with market caps ranging from RM813m to RM3.3b, we found that the median CEO total compensation was RM1.8m. From this we gather that Seong Gooi is paid around the median for CEOs in the industry. What's more, Seong Gooi holds RM8.7m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Speaking on an industry level, nearly 76% of total compensation represents salary, while the remainder of 24% is other remuneration. In Kim Loong Resources Berhad's case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

A Look at Kim Loong Resources Berhad's Growth Numbers

Kim Loong Resources Berhad has reduced its earnings per share by 7.7% a year over the last three years. Its revenue is up 6.3% over the last year.

The decline in EPS is a bit concerning. And the modest revenue growth over 12 months isn't much comfort against the reduced EPS. 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 Loong Resources Berhad Been A Good Investment?

Kim Loong Resources Berhad has generated a total shareholder return of 27% over three years, so most shareholders would be reasonably content. But they would probably prefer not to see CEO compensation far in excess of the median.

In Summary...

As previously discussed, Seong is compensated close to the median for companies of its size, and which belong to the same industry. Kim Loong Resources Berhad has had a tough time in recent years, with declining EPS growth, and although shareholder returns are stable, they are hardly worth celebrating. This doesn't compare well with CEO compensation, which is close to the industry median. We wouldn't go as far as saying CEO compensation is inappropriate, but we don't think the executive is underpaid.

CEO pay is simply one of the many factors that need to be considered while examining business performance. We identified 2 warning signs for Kim Loong Resources Berhad (1 shouldn't be ignored!) 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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