We Think Shareholders May Want To Consider A Review Of Eco World International Berhad's (KLSE:EWINT) CEO Compensation Package

The results at Eco World International Berhad (KLSE:EWINT) have been quite disappointing recently and CEO Leong Teow bears some responsibility for this. Shareholders can take the chance to hold the board and management accountable for the unsatisfactory performance at the next AGM on 24 March 2022. It would also be an opportunity for shareholders to influence management through voting on company resolutions such as executive remuneration, which could impact the firm significantly. We present the case why we think CEO compensation is out of sync with company performance.

Check out our latest analysis for Eco World International Berhad

How Does Total Compensation For Leong Teow Compare With Other Companies In The Industry?

At the time of writing, our data shows that Eco World International Berhad has a market capitalization of RM972m, and reported total annual CEO compensation of RM2.1m for the year to October 2021. We note that's a decrease of 36% compared to last year. We note that the salary portion, which stands at RM2.05m constitutes the majority of total compensation received by the CEO.

In comparison with other companies in the industry with market capitalizations ranging from RM420m to RM1.7b, the reported median CEO total compensation was RM656k. This suggests that Leong Teow is paid more than the median for the industry. Furthermore, Leong Teow directly owns RM6.2m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2021	2020	Proportion (2021)
Salary	RM2.0m	RM3.0m	98%
Other	RM32k	RM198k	2%
Total Compensation	RM2.1m	RM3.2m	100%

Speaking on an industry level, nearly 80% of total compensation represents salary, while the remainder of 20% is other remuneration. Investors will find it interesting that Eco World International Berhad pays the bulk of its rewards through a traditional salary, instead of non-salary benefits. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

A Look at Eco World International Berhad's Growth Numbers

Eco World International Berhad has reduced its earnings per share by 20% a year over the last three years. In the last year, its revenue is down 67%.

Few shareholders would be pleased to read that EPS have declined. This is compounded by the fact revenue is actually down on last year. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. 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 Eco World International Berhad Been A Good Investment?

Few Eco World International Berhad shareholders would feel satisfied with the return of -42% over three years. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

Eco World International Berhad pays its CEO a majority of compensation through a salary. Given that shareholders haven't seen any positive returns on their investment, not to mention the lack of earnings growth, this may suggest that few of them would be willing to award the CEO with a pay rise. At the upcoming AGM, the board will get the chance to explain the steps it plans to take to improve business performance.

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 2 warning signs for Eco World International Berhad you should be aware of, and 1 of them is concerning.

Important note: Eco World International 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. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.