Shareholders May Be Wary Of Increasing InnoTek Limited's (SGX:M14) CEO Compensation Package

Key Insights

• InnoTek will host its Annual General Meeting on 26th of April
• Salary of S$514.5k is part of CEO Yiliang Lou's total remuneration
• Total compensation is similar to the industry average
• InnoTek's EPS declined by 31% over the past three years while total shareholder loss over the past three years was 41%

Shareholders will probably not be too impressed with the underwhelming results at InnoTek Limited (SGX:M14) recently. Shareholders can take the chance to hold the board and management accountable for the unsatisfactory performance at the next AGM on 26th of April. It would also be an opportunity for shareholders to influence management through voting on company resolutions such as executive remuneration, which could impact the firm significantly. The data we present below explains why we think CEO compensation is not consistent with recent performance.

View our latest analysis for InnoTek

How Does Total Compensation For Yiliang Lou Compare With Other Companies In The Industry?

At the time of writing, our data shows that InnoTek Limited has a market capitalization of S$120m, and reported total annual CEO compensation of S$559k for the year to December 2023. This means that the compensation hasn't changed much from last year. In particular, the salary of S$514.5k, makes up a huge portion of the total compensation being paid to the CEO.

For comparison, other companies in the Singaporean Machinery industry with market capitalizations below S$272m, reported a median total CEO compensation of S$559k. So it looks like InnoTek compensates Yiliang Lou in line with the median for the industry. Furthermore, Yiliang Lou directly owns S$16m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2023	2022	Proportion (2023)
Salary	S$514k	S$458k	92%
Other	S$45k	S$114k	8%
Total Compensation	S$559k	S$572k	100%

Talking in terms of the industry, salary represented approximately 85% of total compensation out of all the companies we analyzed, while other remuneration made up 15% of the pie. There isn't a significant difference between InnoTek and the broader market, in terms of salary allocation in the overall compensation package. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

InnoTek Limited's Growth

InnoTek Limited has reduced its earnings per share by 31% a year over the last three years. Its revenue is up 10% over the last year.

Few shareholders would be pleased to read that EPS have declined. There's no doubt that the silver lining is that revenue is up. But it isn't sufficiently fast growth to overlook the fact that EPS has gone backwards over three years. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has InnoTek Limited Been A Good Investment?

Few InnoTek Limited shareholders would feel satisfied with the return of -41% over three years. So shareholders would probably want the company to be less generous with CEO compensation.

In Summary...

Given that shareholders haven't seen any positive returns on their investment, not to mention the lack of earnings growth, this may suggest that few of them would be willing to award the CEO with a pay rise. At the upcoming AGM, management will get a chance to explain how they plan to get the business back on track and address the concerns from investors.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. In our study, we found 3 warning signs for InnoTek you should be aware of, and 2 of them make us uncomfortable.

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. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.