Here's What We Learned About The CEO Pay At Ralco Corporation Berhad (KLSE:RALCO)

Heng Tan became the CEO of Ralco Corporation Berhad (KLSE:RALCO) in 2011, 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 look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Ralco Corporation Berhad.

Check out our latest analysis for Ralco Corporation Berhad

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

According to our data, Ralco Corporation Berhad has a market capitalization of RM31m, and paid its CEO total annual compensation worth RM320k over the year to December 2019. That's a slight decrease of 5.7% on the prior year. In particular, the salary of RM240.0k, makes up a huge portion of the total compensation being paid to the CEO.

In comparison with other companies in the industry with market capitalizations under RM814m, the reported median total CEO compensation was RM749k. In other words, Ralco Corporation Berhad pays its CEO lower than the industry median. What's more, Heng Tan holds RM5.3m 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 74% of total compensation represents salary, while the remainder of 26% is other remuneration. Ralco Corporation Berhad is largely mirroring the industry average when it comes to the share a salary enjoys in overall compensation. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

Ralco Corporation Berhad's Growth

Ralco Corporation Berhad has seen its earnings per share (EPS) increase by 36% a year over the past three years. In the last year, its revenue is down 13%.

This demonstrates that the company has been improving recently and is good news for the shareholders. While it would be good to see revenue growth, profits matter more in the end. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Ralco Corporation Berhad Been A Good Investment?

Ralco Corporation Berhad has generated a total shareholder return of 9.9% over three years, so most shareholders wouldn't be too disappointed. But they would probably prefer not to see CEO compensation far in excess of the median.

To Conclude...

As we touched on above, Ralco Corporation Berhad is currently paying its CEO below the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. But over the last three years, EPS growth has been growing rapidly, which is a great sign for the company. Shareholder returns, in comparison, have not been as impressive. We would wish for better returns (whether dividends or capital gains) but we do admire the solidEPS growth on show here. So it's fair to say Heng has done quite well despite modest compensation and shareholders might not be averse to a raise.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. We identified 4 warning signs for Ralco Corporation Berhad (2 are a bit unpleasant!) 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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