How Should Investors React To LYC Healthcare Berhad's (KLSE:LYC) CEO Pay?

This article will reflect on the compensation paid to Diong Sui who has served as CEO of LYC Healthcare Berhad (KLSE:LYC) since 2017. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for LYC Healthcare Berhad.

View our latest analysis for LYC Healthcare Berhad

How Does Total Compensation For Diong Sui Compare With Other Companies In The Industry?

According to our data, LYC Healthcare Berhad has a market capitalization of RM98m, and paid its CEO total annual compensation worth RM484k over the year to March 2020. Notably, that's an increase of 13% over the year before. Notably, the salary which is RM324.0k, represents most of the total compensation being paid.

For comparison, other companies in the industry with market capitalizations below RM811m, reported a median total CEO compensation of RM663k. This suggests that LYC Healthcare Berhad remunerates its CEO largely in line with the industry average.

On an industry level, around 75% of total compensation represents salary and 25% is other remuneration. It's interesting to note that LYC Healthcare Berhad allocates a smaller portion of compensation to salary in comparison to the broader industry. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

LYC Healthcare Berhad's Growth

LYC Healthcare Berhad has reduced its earnings per share by 27% a year over the last three years. Its revenue is up 37% over the last year.

The decrease in EPS could be a concern for some investors. On the other hand, the strong revenue growth suggests the business is growing. In conclusion we can't form a strong opinion about business performance yet; but it's one worth watching. While we don't have analyst forecasts for the company, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.

Has LYC Healthcare Berhad Been A Good Investment?

With a three year total loss of 49% for the shareholders, LYC Healthcare Berhad would certainly have some dissatisfied shareholders. So shareholders would probably want the company to be lessto generous with CEO compensation.

To Conclude...

As previously discussed, Diong is compensated close to the median for companies of its size, and which belong to the same industry. However, revenues have increased over the past year, a positive sign for the company. On the other hand, shareholder returns for Diong are negative over the same period. EPS growth is bleak as well, adding fuel to the fire. It's tough for us to say Diong is overpaid but a mixed bag in terms of performance will surely irk shareholders and reduce chances of a raise.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. We did our research and identified 5 warning signs (and 1 which is concerning) in LYC Healthcare Berhad 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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