We Think Some Shareholders May Hesitate To Increase YKGI Holdings Berhad's (KLSE:YKGI) CEO Compensation

Despite YKGI Holdings Berhad's (KLSE:YKGI) share price growing positively in the past few years, the per-share earnings growth has not grown to investors' expectations, suggesting that there could be other factors at play driving the share price. The upcoming AGM on 23 June 2021 may be an opportunity for shareholders to bring up any concerns they may have for the board’s attention. One way that shareholders can influence managerial decisions is through voting on CEO and executive remuneration packages, which studies show could impact company performance. From the data that we gathered, we think that shareholders should hold off on a raise on CEO compensation until performance starts to show some improvement.

View our latest analysis for YKGI Holdings Berhad

Comparing YKGI Holdings Berhad's CEO Compensation With the industry

Our data indicates that YKGI Holdings Berhad has a market capitalization of RM94m, and total annual CEO compensation was reported as RM919k for the year to December 2020. Notably, that's a decrease of 12% over the year before. We note that the salary portion, which stands at RM579.8k constitutes the majority of total compensation received by the CEO.

For comparison, other companies in the industry with market capitalizations below RM824m, reported a median total CEO compensation of RM681k. Hence, we can conclude that Victor Hii is remunerated higher than the industry median. Moreover, Victor Hii also holds RM2.6m worth of YKGI Holdings Berhad 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	RM580k	RM586k	63%
Other	RM340k	RM463k	37%
Total Compensation	RM919k	RM1.0m	100%

On an industry level, around 78% of total compensation represents salary and 22% is other remuneration. It's interesting to note that YKGI Holdings Berhad allocates a smaller portion of compensation to salary in comparison to the broader industry. 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 YKGI Holdings Berhad's Growth Numbers

YKGI Holdings Berhad has reduced its earnings per share by 64% a year over the last three years. The trailing twelve months of revenue was pretty much the same as the prior period.

The decline in EPS is a bit concerning. And the flat revenue hardly impresses. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. 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 YKGI Holdings Berhad Been A Good Investment?

With a total shareholder return of 7.3% over three years, YKGI Holdings Berhad has done okay by shareholders, but there's always room for improvement. In light of that, investors might probably want to see an improvement on their returns before they feel generous about increasing the CEO remuneration.

In Summary...

While it's true that shareholders have owned decent returns, it's hard to overlook the lack of earnings growth and this makes us question whether these returns will continue. In the upcoming AGM, shareholders will get the opportunity to discuss any concerns with the board, including those related to CEO remuneration and assess if the board's plan will likely improve performance in the future.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. That's why we did our research, and identified 5 warning signs for YKGI Holdings Berhad (of which 1 is significant!) that you should know about in order to have a holistic understanding of the stock.

Important note: YKGI Holdings Berhad is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE 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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