What We Learned About LPI Capital Bhd's (KLSE:LPI) CEO Pay

This article will reflect on the compensation paid to Kok Tan who has served as CEO of LPI Capital Bhd (KLSE:LPI) since 2013. This analysis will also assess whether LPI Capital Bhd pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

See our latest analysis for LPI Capital Bhd

How Does Total Compensation For Kok Tan Compare With Other Companies In The Industry?

According to our data, LPI Capital Bhd has a market capitalization of RM5.2b, and paid its CEO total annual compensation worth RM2.9m over the year to December 2019. Notably, that's an increase of 13% over the year before. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at RM1.2m.

For comparison, other companies in the same industry with market capitalizations ranging between RM4.1b and RM13b had a median total CEO compensation of RM3.9m. From this we gather that Kok Tan is paid around the median for CEOs in the industry. Furthermore, Kok Tan directly owns RM8.2m 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 66% of total compensation out of all the companies we analyzed, while other remuneration made up 34% of the pie. It's interesting to note that LPI Capital Bhd allocates a smaller portion of compensation to salary in comparison to the broader industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

LPI Capital Bhd's Growth

LPI Capital Bhd's earnings per share (EPS) grew 1.7% per year over the last three years. The trailing twelve months of revenue was pretty much the same as the prior period.

We would argue that the improvement in revenue is good, but isn't particularly impressive, but we're happy with the modest EPS growth. So there are some positives here, but not enough to earn high praise. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.

Has LPI Capital Bhd Been A Good Investment?

With a three year total loss of 3.0% for the shareholders, LPI Capital Bhd would certainly have some dissatisfied shareholders. So shareholders would probably want the company to be lessto generous with CEO compensation.

In Summary...

As we touched on above, LPI Capital Bhd is currently paying a compensation that's close to the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. But with negative shareholder returns and unimpressive EPS growth, shareholders will surely be disturbed. We'd stop short of saying CEO compensation is inappropriate, but without an improvement in performance, it's sure to draw criticism. Shareholders will also not want to see performance improving before agreeing to any raise.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. We did our research and identified 2 warning signs (and 1 which is significant) in LPI Capital Bhd we think you should know about.

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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