Key Things To Understand About Khong Guan's (SGX:K03) CEO Pay Cheque

This article will reflect on the compensation paid to Soo Eng Chew who has served as CEO of Khong Guan Limited (SGX:K03) since 2007. This analysis will also assess whether Khong Guan pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

View our latest analysis for Khong Guan

Comparing Khong Guan Limited's CEO Compensation With the industry

Our data indicates that Khong Guan Limited has a market capitalization of S$37m, and total annual CEO compensation was reported as S$507k for the year to July 2020. This means that the compensation hasn't changed much from last year. Notably, the salary which is S$366.7k, represents most of the total compensation being paid.

For comparison, other companies in the industry with market capitalizations below S$267m, reported a median total CEO compensation of S$156k. Accordingly, our analysis reveals that Khong Guan Limited pays Soo Eng Chew north of the industry median. What's more, Soo Eng Chew holds S$320k worth of shares in the company in their own name.

Talking in terms of the industry, salary represented approximately 90% of total compensation out of all the companies we analyzed, while other remuneration made up 9.5% of the pie. In Khong Guan's case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

Khong Guan Limited's Growth

Over the last three years, Khong Guan Limited has shrunk its earnings per share by 66% per year. Its revenue is up 1.8% over the last year.

Overall this is not a very positive result for shareholders. The fairly low revenue growth fails to impress given that the EPS is down. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. 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 Khong Guan Limited Been A Good Investment?

Since shareholders would have lost about 21% over three years, some Khong Guan Limited investors would surely be feeling negative emotions. So shareholders would probably want the company to be lessto generous with CEO compensation.

In Summary...

As previously discussed, Soo Eng is compensated more than what is normal for CEOs of companies of similar size, and which belong to the same industry. Disappointingly, share price gains over the last three years have failed to materialize. Add to that declining EPS growth, and you have the perfect recipe for shareholder irritation. Overall, with such poor performance, shareholder's would probably have questions if the company decided to give the CEO a raise.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. In our study, we found 3 warning signs for Khong Guan you should be aware of, and 1 of them is potentially serious.

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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