Shareholders Will Probably Hold Off On Increasing United Overseas Bank Limited's (SGX:U11) CEO Compensation For The Time Being

Share price growth at United Overseas Bank Limited (SGX:U11) has remained rather flat over the last few years and it may be because earnings has struggled to grow at all. The upcoming AGM on 30 April 2021 may be an opportunity for shareholders to bring up any concerns they may have for the board’s attention. They will be able to influence managerial decisions through the exercise of their voting power on resolutions, such as CEO remuneration and other matters, which may influence future company prospects. From the data that we gathered, we think that shareholders should hold off on a raise on CEO compensation until performance starts to show some improvement.

See our latest analysis for United Overseas Bank

Comparing United Overseas Bank Limited's CEO Compensation With the industry

Our data indicates that United Overseas Bank Limited has a market capitalization of S$44b, and total annual CEO compensation was reported as S$9.8m for the year to December 2020. We note that's a decrease of 8.8% compared to last year. We think total compensation is more important but our data shows that the CEO salary is lower, at S$1.2m.

For comparison, other companies in the industry with market capitalizations above S$11b, reported a median total CEO compensation of S$561k. Hence, we can conclude that Ee Cheong Wee is remunerated higher than the industry median. Moreover, Ee Cheong Wee also holds S$1.1b worth of United Overseas Bank 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 69% of total compensation represents salary and 31% is other remuneration. In United Overseas Bank's case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

United Overseas Bank Limited's Growth

United Overseas Bank Limited has reduced its earnings per share by 5.3% a year over the last three years. It saw its revenue drop 21% over the last year.

Few shareholders would be pleased to read that EPS have declined. This is compounded by the fact revenue is actually down on last year. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. 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 United Overseas Bank Limited Been A Good Investment?

With a total shareholder return of 0.8% over three years, United Overseas Bank Limited has done okay by shareholders, but there's always room for improvement. In light of that, investors might probably want to see an improvement on their returns before they feel generous about increasing the CEO remuneration.

In Summary...

While it's true that the share price growth hasn't been bad, it's hard to overlook the lack of earnings growth and this makes us question whether there will be any strong catalyst for the stock to improve. In the upcoming AGM, shareholders will get the opportunity to discuss any concerns with the board, including those related to CEO remuneration and assess if the board's plan will likely improve performance in the future.

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 did our research and spotted 1 warning sign for United Overseas Bank that investors should look into moving forward.

Switching gears from United Overseas Bank, 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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