What Can We Learn About NPC Resources Berhad's (KLSE:NPC) CEO Compensation?

Pang Loo became the CEO of NPC Resources Berhad (KLSE:NPC) in 2002, 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 evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.

Check out our latest analysis for NPC Resources Berhad

How Does Total Compensation For Pang Loo Compare With Other Companies In The Industry?

At the time of writing, our data shows that NPC Resources Berhad has a market capitalization of RM222m, and reported total annual CEO compensation of RM856k for the year to December 2019. That's a notable decrease of 8.9% on last year. Notably, the salary which is RM817.0k, represents most of the total compensation being paid.

In comparison with other companies in the industry with market capitalizations under RM810m, the reported median total CEO compensation was RM659k. So it looks like NPC Resources Berhad compensates Pang Loo in line with the median for the industry. Furthermore, Pang Loo directly owns RM25m worth of shares in the company, implying that they are deeply invested in the company's success.

On an industry level, around 76% of total compensation represents salary and 24% is other remuneration. NPC Resources Berhad pays a high salary, concentrating more on this aspect of compensation in comparison to non-salary pay. 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.

NPC Resources Berhad's Growth

Over the last three years, NPC Resources Berhad has shrunk its earnings per share by 35% per year. In the last year, its revenue is up 13%.

Overall this is not a very positive result for shareholders. There's no doubt that the silver lining is that revenue is up. But it isn't sufficiently fast growth to overlook the fact that EPS has gone backwards over three years. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. We don't have analyst forecasts, but you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.

Has NPC Resources Berhad Been A Good Investment?

Since shareholders would have lost about 2.6% over three years, some NPC Resources Berhad investors would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

Pang receives almost all of their compensation through a salary. As previously discussed, Pang is compensated close to the median for companies of its size, and which belong to the same industry. On the other hand, EPS growth and total shareholder return have been negative for the last three years. We'd stop short of saying compensation is inappropriate, but we would understand if shareholders had questions regarding a future raise.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. That's why we did our research, and identified 2 warning signs for NPC Resources Berhad (of which 1 shouldn't be ignored!) that you should know about in order to have a holistic understanding of the stock.

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.

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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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