Why UOA Development Bhd's (KLSE:UOADEV) CEO Pay Matters

This article will reflect on the compensation paid to Chong Kong who has served as CEO of UOA Development Bhd (KLSE:UOADEV) since 2004. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for UOA Development Bhd.

Check out our latest analysis for UOA Development Bhd

Comparing UOA Development Bhd's CEO Compensation With the industry

Our data indicates that UOA Development Bhd has a market capitalization of RM3.5b, and total annual CEO compensation was reported as RM4.1m for the year to December 2019. We note that's a decrease of 10% compared to last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at RM1.3m.

In comparison with other companies in the industry with market capitalizations ranging from RM1.6b to RM6.5b, the reported median CEO total compensation was RM2.6m. This suggests that Chong Kong is paid more than the median for the industry.

Speaking on an industry level, nearly 80% of total compensation represents salary, while the remainder of 20% is other remuneration. In UOA Development Bhd'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.

UOA Development Bhd's Growth

Over the last three years, UOA Development Bhd has shrunk its earnings per share by 16% per year. It saw its revenue drop 36% 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. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has UOA Development Bhd Been A Good Investment?

Since shareholders would have lost about 19% over three years, some UOA Development Bhd investors would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

As previously discussed, Chong is compensated more than what is normal for CEOs of companies of similar size, and which belong to the same industry. Unfortunately, this doesn't look great when you see shareholder returns have been negative over the last three years. To make matters worse, EPS growth has also been negative during this period. Understandably, the company's shareholders might have some questions about the CEO's remuneration, given the disappointing performance.

CEO pay is simply one of the many factors that need to be considered while examining business performance. We did our research and identified 4 warning signs (and 1 which is a bit unpleasant) in UOA Development Bhd we think you should know about.

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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