We Think Shareholders Are Less Likely To Approve A Large Pay Rise For Rhone Ma Holdings Berhad's (KLSE:RHONEMA) CEO For Now

As many shareholders of Rhone Ma Holdings Berhad (KLSE:RHONEMA) will be aware, they have not made a gain on their investment in the past three years. Per share earnings growth is also poor, despite revenues growing. Shareholders will have a chance to take their concerns to the board at the next AGM on 26 July 2021 and vote on resolutions including executive compensation, which studies show may have an impact on company performance. We think shareholders may be cautious of approving a pay rise for the CEO at the moment, based on our analysis below.

See our latest analysis for Rhone Ma Holdings Berhad

How Does Total Compensation For I-Ie Lim Compare With Other Companies In The Industry?

At the time of writing, our data shows that Rhone Ma Holdings Berhad has a market capitalization of RM131m, and reported total annual CEO compensation of RM688k for the year to December 2020. Notably, that's a decrease of 17% over the year before. We note that the salary portion, which stands at RM456.3k constitutes the majority of total compensation received by the CEO.

For comparison, other companies in the industry with market capitalizations below RM842m, reported a median total CEO compensation of RM187k. Accordingly, our analysis reveals that Rhone Ma Holdings Berhad pays I-Ie Lim north of the industry median. Furthermore, I-Ie Lim directly owns RM4.7m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2020	2019	Proportion (2020)
Salary	RM456k	RM392k	66%
Other	RM232k	RM437k	34%
Total Compensation	RM688k	RM829k	100%

Speaking on an industry level, nearly 81% of total compensation represents salary, while the remainder of 19% is other remuneration. It's interesting to note that Rhone Ma Holdings Berhad allocates a smaller portion of compensation to salary in comparison to the broader 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.

A Look at Rhone Ma Holdings Berhad's Growth Numbers

Over the last three years, Rhone Ma Holdings Berhad has shrunk its earnings per share by 19% per year. Its revenue is up 22% over the last year.

Investors would be a bit wary of companies that have lower EPS But in contrast the revenue growth is strong, suggesting future potential for EPS growth. In conclusion we can't form a strong opinion about business performance yet; but it's one worth watching. We don't have analyst forecasts, but you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.

Has Rhone Ma Holdings Berhad Been A Good Investment?

Given the total shareholder loss of 11% over three years, many shareholders in Rhone Ma Holdings Berhad are probably rather dissatisfied, to say the least. So shareholders would probably want the company to be less generous with CEO compensation.

To Conclude...

The returns to shareholders is disappointing along with lack of earnings growth, which goes some way in explaining the poor returns. The upcoming AGM will provide shareholders the opportunity to revisit the company’s remuneration policies and evaluate if the board’s judgement and decision-making is aligned with that of the company’s shareholders.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. We did our research and identified 3 warning signs (and 1 which is significant) in Rhone Ma Holdings Berhad we think you should know about.

Important note: Rhone Ma 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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