Here's What We Learned About The CEO Pay At Eastern & Oriental Berhad (KLSE:E&O)

Tuck Kok became the CEO of Eastern & Oriental Berhad (KLSE:E&O) in 2016, 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 assess whether Eastern & Oriental Berhad pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

Check out our latest analysis for Eastern & Oriental Berhad

Comparing Eastern & Oriental Berhad's CEO Compensation With the industry

At the time of writing, our data shows that Eastern & Oriental Berhad has a market capitalization of RM621m, and reported total annual CEO compensation of RM1.3m for the year to March 2020. That's mostly flat as compared to the prior year's compensation. While we always look at total compensation first, our analysis shows that the salary component is less, at RM480k.

On comparing similar companies from the same industry with market caps ranging from RM404m to RM1.6b, we found that the median CEO total compensation was RM4.1m. This suggests that Tuck Kok is paid below the industry median.

On an industry level, around 83% of total compensation represents salary and 17% is other remuneration. In Eastern & Oriental Berhad's case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

A Look at Eastern & Oriental Berhad's Growth Numbers

Over the last three years, Eastern & Oriental Berhad has shrunk its earnings per share by 104% per year. In the last year, its revenue is down 56%.

Overall this is not a very positive result for shareholders. This is compounded by the fact revenue is actually down on last year. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.

Has Eastern & Oriental Berhad Been A Good Investment?

Since shareholders would have lost about 69% over three years, some Eastern & Oriental Berhad investors would surely be feeling negative emotions. So shareholders would probably want the company to be lessto generous with CEO compensation.

To Conclude...

As we touched on above, Eastern & Oriental Berhad is currently paying its CEO below the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. EPS growth has failed to impress us, and the same can be said about shareholder returns. Although we wouldn’t say CEO compensation is high, it’s tough to foresee shareholders warming up to thoughts of a bump anytime soon.

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 did our research and identified 2 warning signs (and 1 which is significant) in Eastern & Oriental Berhad we think you should know about.

Important note: Eastern & Oriental 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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