Chiaw Chew became the CEO of Ibraco Berhad (KLSE:IBRACO) in 2010, 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 look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Ibraco Berhad.
See our latest analysis for Ibraco Berhad
Comparing Ibraco Berhad's CEO Compensation With the industry
Our data indicates that Ibraco Berhad has a market capitalization of RM248m, and total annual CEO compensation was reported as RM777k for the year to December 2019. That's just a smallish increase of 6.3% on last year. We note that the salary portion, which stands at RM747.6k constitutes the majority of total compensation received by the CEO.
On comparing similar-sized companies in the industry with market capitalizations below RM813m, we found that the median total CEO compensation was RM802k. So it looks like Ibraco Berhad compensates Chiaw Chew in line with the median for the industry. What's more, Chiaw Chew holds RM7.9m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.
| Component | 2019 | 2018 | Proportion (2019) |
| Salary | RM748k | RM698k | 96% |
| Other | RM30k | RM33k | 4% |
| Total Compensation | RM777k | RM732k | 100% |
On an industry level, around 83% of total compensation represents salary and 17% is other remuneration. Ibraco Berhad has gone down a largely traditional route, paying Chiaw Chew a high salary, giving it preference over non-salary benefits. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.
Ibraco Berhad's Growth
Over the past three years, Ibraco Berhad has seen its earnings per share (EPS) grow by 46% per year. Its revenue is up 11% over the last year.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's a real positive to see this sort of revenue growth in a single year. That suggests a healthy and growing business. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.
Has Ibraco Berhad Been A Good Investment?
Given the total shareholder loss of 33% over three years, many shareholders in Ibraco Berhad are probably rather dissatisfied, to say the least. This suggests it would be unwise for the company to pay the CEO too generously.
In Summary...
Chiaw receives almost all of their compensation through a salary. As we noted earlier, Ibraco Berhad pays its CEO in line with similar-sized companies belonging to the same industry. Meanwhile, shareholder returns paint a sorry picture for the company, finishing in the red over the last three years. However, EPS growth is positive over the same time frame. Overall, we wouldn't say Chiaw is paid an unjustified compensation, but shareholders might not favor a raise before shareholder returns show a positive trend.
CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. We've identified 3 warning signs for Ibraco Berhad that investors should be aware of in a dynamic business environment.
Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.
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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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About KLSE:IBRACO
Ibraco Berhad
Engages in the construction and development of properties primarily in Malaysia.
High growth potential with adequate balance sheet.
