Our View On Perusahaan Sadur Timah Malaysia (Perstima) Berhad's (KLSE:PERSTIM) CEO Pay

Hiroaki Yano became the CEO of Perusahaan Sadur Timah Malaysia (Perstima) Berhad (KLSE:PERSTIM) in 2017, 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 Perusahaan Sadur Timah Malaysia (Perstima) Berhad

Comparing Perusahaan Sadur Timah Malaysia (Perstima) Berhad's CEO Compensation With the industry

Our data indicates that Perusahaan Sadur Timah Malaysia (Perstima) Berhad has a market capitalization of RM488m, and total annual CEO compensation was reported as RM681k for the year to March 2020. This means that the compensation hasn't changed much from last year. We note that the salary portion, which stands at RM489.0k constitutes the majority of total compensation received by the CEO.

In comparison with other companies in the industry with market capitalizations under RM812m, the reported median total CEO compensation was RM711k. This suggests that Perusahaan Sadur Timah Malaysia (Perstima) Berhad remunerates its CEO largely in line with the industry average.

On an industry level, around 77% of total compensation represents salary and 23% is other remuneration. Although there is a difference in how total compensation is set, Perusahaan Sadur Timah Malaysia (Perstima) Berhad more or less reflects the market in terms of setting the salary. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

A Look at Perusahaan Sadur Timah Malaysia (Perstima) Berhad's Growth Numbers

Earnings per share at Perusahaan Sadur Timah Malaysia (Perstima) Berhad are much the same as they were three years ago, albeit with slightly higher. Its revenue is down 12% over the previous year.

We would prefer it if there was revenue growth, but it is good to see a modest EPS growth at least. In conclusion we can't form a strong opinion about business performance yet; but it's one worth watching. 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 Perusahaan Sadur Timah Malaysia (Perstima) Berhad Been A Good Investment?

With a total shareholder return of 12% over three years, Perusahaan Sadur Timah Malaysia (Perstima) Berhad shareholders would, in general, be reasonably content. But they probably don't want to see the CEO paid more than is normal for companies around the same size.

To Conclude...

As we noted earlier, Perusahaan Sadur Timah Malaysia (Perstima) Berhad pays its CEO in line with similar-sized companies belonging to the same industry. But the company has failed to produce substantial growth in either EPS or total shareholder return. Considering the steady performance, it's tough to call out CEO compensation as too high, but shareholders might want to see more robust growth metrics before agreeing to a future raise.

CEO pay is simply one of the many factors that need to be considered while examining business performance. We identified 3 warning signs for Perusahaan Sadur Timah Malaysia (Perstima) Berhad (1 makes us a bit uncomfortable!) that you should be aware of before investing here.

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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