A Quick Analysis On EcoFirst Consolidated Bhd's (KLSE:ECOFIRS) CEO Salary

This article will reflect on the compensation paid to Kwing Tiong who has served as CEO of EcoFirst Consolidated Bhd (KLSE:ECOFIRS) since 2009. This analysis will also assess whether EcoFirst Consolidated Bhd pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

Check out our latest analysis for EcoFirst Consolidated Bhd

Comparing EcoFirst Consolidated Bhd's CEO Compensation With the industry

At the time of writing, our data shows that EcoFirst Consolidated Bhd has a market capitalization of RM312m, and reported total annual CEO compensation of RM992k for the year to May 2020. That's a slightly lower by 3.1% over the previous year. In particular, the salary of RM792.0k, makes up a huge portion of the total compensation being paid to the CEO.

In comparison with other companies in the industry with market capitalizations under RM814m, the reported median total CEO compensation was RM804k. So it looks like EcoFirst Consolidated Bhd compensates Kwing Tiong in line with the median for the industry. Moreover, Kwing Tiong also holds RM53m worth of EcoFirst Consolidated Bhd stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

On an industry level, roughly 83% of total compensation represents salary and 17% is other remuneration. Although there is a difference in how total compensation is set, EcoFirst Consolidated Bhd more or less reflects the market in terms of setting the salary. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

EcoFirst Consolidated Bhd's Growth

Over the last three years, EcoFirst Consolidated Bhd has shrunk its earnings per share by 40% per year. It saw its revenue drop 55% over the last year.

The decline in EPS is a bit concerning. And the fact that revenue is down year on year arguably paints an ugly picture. So given this relatively weak performance, shareholders would probably not want to see high compensation 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 EcoFirst Consolidated Bhd Been A Good Investment?

EcoFirst Consolidated Bhd has generated a total shareholder return of 31% over three years, so most shareholders would be reasonably content. But they would probably prefer not to see CEO compensation far in excess of the median.

In Summary...

As previously discussed, Kwing is compensated close to the median for companies of its size, and which belong to the same industry. According to our analysis, EcoFirst Consolidated Bhd is suffering from uninspiring EPS growth, and even though shareholder returns are stable, they are hardly impressive. These figures do not go well against CEO compensation, which is more or less equal to the industry median. We would stop short of the compensation is inappropriate, but we can't say the executive is underpaid.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. In our study, we found 3 warning signs for EcoFirst Consolidated Bhd you should be aware of, and 1 of them shouldn't be ignored.

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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