How Should Investors Feel About Notion VTec Berhad's (KLSE:NOTION) CEO Remuneration?

The CEO of Notion VTec Berhad (KLSE:NOTION) is William Choo, and this article examines the executive's compensation against the backdrop of overall company performance. This analysis will also assess whether Notion VTec Berhad pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

View our latest analysis for Notion VTec Berhad

Comparing Notion VTec Berhad's CEO Compensation With the industry

Our data indicates that Notion VTec Berhad has a market capitalization of RM451m, and total annual CEO compensation was reported as RM1.9m for the year to September 2020. We note that's an increase of 39% above last year. In particular, the salary of RM1.08m, makes up a huge portion of the total compensation being paid to the CEO.

For comparison, other companies in the industry with market capitalizations below RM809m, reported a median total CEO compensation of RM70k. This suggests that William Choo is paid more than the median for the industry. Moreover, William Choo also holds RM46m worth of Notion VTec Berhad 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 67% of total compensation represents salary and 33% is other remuneration. Notion VTec Berhad pays a modest slice of remuneration through salary, as compared to the broader industry. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.

A Look at Notion VTec Berhad's Growth Numbers

Over the last three years, Notion VTec Berhad has shrunk its earnings per share by 24% per year. Its revenue is up 2.1% over the last year.

Overall this is not a very positive result for shareholders. And the modest revenue growth over 12 months isn't much comfort against the reduced EPS. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Notion VTec Berhad Been A Good Investment?

Boasting a total shareholder return of 109% over three years, Notion VTec Berhad has done well by shareholders. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

In Summary...

As we noted earlier, Notion VTec Berhad pays its CEO higher than the norm for similar-sized companies belonging to the same industry. We feel that EPS have been a bit disappointing, but it's nice to see positive shareholder returns over the last three years. Considering positive investor returns, it would be bold of us to criticize CEO compensation, but shareholders might want to see healthier EPS growth before a raise is given out.

CEO compensation can have a massive impact on performance, but it's just one element. That's why we did some digging and identified 3 warning signs for Notion VTec Berhad that investors should think about before committing capital to this stock.

Switching gears from Notion VTec Berhad, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.

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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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