Why VICOM's (SGX:WJP) CEO Pay Matters

Wing Yew Sim became the CEO of VICOM Ltd (SGX:WJP) in 2012, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. This analysis will also assess whether VICOM pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

View our latest analysis for VICOM

Comparing VICOM Ltd's CEO Compensation With the industry

According to our data, VICOM Ltd has a market capitalization of S$766m, and paid its CEO total annual compensation worth S$661k over the year to December 2019. Notably, that's an increase of 11% over the year before. While we always look at total compensation first, our analysis shows that the salary component is less, at S$290k.

On comparing similar companies from the same industry with market caps ranging from S$267m to S$1.1b, we found that the median CEO total compensation was S$138k. Hence, we can conclude that Wing Yew Sim is remunerated higher than the industry median. Moreover, Wing Yew Sim also holds S$86k worth of VICOM stock directly under their own name.

On an industry level, around 91% of total compensation represents salary and 8.7% is other remuneration. It's interesting to note that VICOM allocates a smaller portion of compensation to salary 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.

VICOM Ltd's Growth

Over the last three years, VICOM Ltd has shrunk its earnings per share by 3.7% per year. Its revenue is down 9.4% over the previous year.

Few shareholders would be pleased to read that EPS have declined. And the impression is worse when you consider revenue is down year-on-year. 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 VICOM Ltd Been A Good Investment?

We think that the total shareholder return of 76%, over three years, would leave most VICOM Ltd shareholders smiling. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.

In Summary...

As previously discussed, Wing Yew is compensated more than what is normal for CEOs of companies of similar size, and which belong to the same industry. We're not seeing great strides in EPS, but the company has clearly pleased some investors, given the returns over the last three years. So while we don't think, Wing Yew is paid too much, shareholders may want to see some positive EPS growth before pay rises are given out.

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. That's why we did some digging and identified 1 warning sign for VICOM that you should be aware of before investing.

Important note: VICOM is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE 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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