Does Southern Steel Berhad's (KLSE:SSTEEL) CEO Salary Compare Well With The Performance Of The Company?

Chong Chow has been the CEO of Southern Steel Berhad (KLSE:SSTEEL) since 2014, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also assess whether Southern Steel Berhad pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

View our latest analysis for Southern Steel Berhad

How Does Total Compensation For Chong Chow Compare With Other Companies In The Industry?

According to our data, Southern Steel Berhad has a market capitalization of RM456m, and paid its CEO total annual compensation worth RM1.7m over the year to June 2020. That's a notable decrease of 46% on last year. Notably, the salary which is RM1.66m, represents most of the total compensation being paid.

On comparing similar-sized companies in the industry with market capitalizations below RM806m, we found that the median total CEO compensation was RM681k. Hence, we can conclude that Chong Chow is remunerated higher than the industry median.

On an industry level, around 77% of total compensation represents salary and 23% is other remuneration. Investors will find it interesting that Southern Steel Berhad pays the bulk of its rewards through a traditional salary, instead of non-salary benefits. 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.

Southern Steel Berhad's Growth

Southern Steel Berhad has reduced its earnings per share by 103% a year over the last three years. Its revenue is down 40% over the previous year.

Overall this is not a very positive result for shareholders. And the impression is worse when you consider revenue is down year-on-year. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Southern Steel Berhad Been A Good Investment?

With a three year total loss of 64% for the shareholders, Southern Steel Berhad would certainly have some dissatisfied shareholders. So shareholders would probably want the company to be lessto generous with CEO compensation.

In Summary...

Chong receives almost all of their compensation through a salary. As we touched on above, Southern Steel Berhad is currently paying its CEO higher than the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. Unfortunately, this doesn't look great when you see shareholder returns have been negative over the last three years. What's equally worrying is that the company isn't growing by our analysis. Considering such poor performance, we think shareholders might be concerned if the CEO's compensation were to grow.

CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. We identified 2 warning signs for Southern Steel Berhad (1 is potentially serious!) that you should be aware of before investing here.

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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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