Hock Lee has been the CEO of SCGM Bhd (KLSE:SCGM) since 2015, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also assess whether SCGM Bhd pays its CEO appropriately, considering recent earnings growth and total shareholder returns.
View our latest analysis for SCGM Bhd
Comparing SCGM Bhd's CEO Compensation With the industry
According to our data, SCGM Bhd has a market capitalization of RM420m, and paid its CEO total annual compensation worth RM1.1m over the year to April 2020. This means that the compensation hasn't changed much from last year. We note that the salary portion, which stands at RM992.4k constitutes the majority of total compensation received by the CEO.
On comparing similar-sized companies in the industry with market capitalizations below RM810m, we found that the median total CEO compensation was RM797k. Accordingly, our analysis reveals that SCGM Bhd pays Hock Lee north of the industry median. Moreover, Hock Lee also holds RM27m worth of SCGM Bhd stock directly under their own name, which reveals to us that they have a significant personal stake in the company.
| Component | 2020 | 2019 | Proportion (2020) |
| Salary | RM992k | RM992k | 88% |
| Other | RM133k | RM113k | 12% |
| Total Compensation | RM1.1m | RM1.1m | 100% |
On an industry level, around 75% of total compensation represents salary and 25% is other remuneration. SCGM Bhd is paying a higher share of its remuneration through a salary in comparison to the overall industry. 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.
SCGM Bhd's Growth
Over the past three years, SCGM Bhd has seen its earnings per share (EPS) grow by 5.5% per year. In the last year, its revenue is up 1.9%.
We would argue that the improvement in revenue is good, but isn't particularly impressive, but the modest improvement in EPS is good. Considering these factors we'd say performance has been pretty decent, though not amazing. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..
Has SCGM Bhd Been A Good Investment?
With a total shareholder return of 9.1% over three years, SCGM Bhd has done okay by shareholders. But they would probably prefer not to see CEO compensation far in excess of the median.
To Conclude...
As we noted earlier, SCGM Bhd pays its CEO higher than the norm for similar-sized companies belonging to the same industry. However, EPS growth is not moving in the right direction, and the returns to shareholders could have been better, over the last three years. We'd stop short of saying CEO pay is inappropriate, but we'd like to see healthier business growth from the company, moving forward.
While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. We did our research and spotted 3 warning signs for SCGM Bhd that investors should look into moving forward.
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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About KLSE:SCGM
Adequate balance sheet low.
