The CEO of Chemical Industries (Far East) Limited (SGX:C05) is Soo Peng Lim, and this article examines the executive's compensation against the backdrop of overall company performance. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.
Comparing Chemical Industries (Far East) Limited's CEO Compensation With the industry
Our data indicates that Chemical Industries (Far East) Limited has a market capitalization of S$51m, and total annual CEO compensation was reported as S$1.5m for the year to March 2020. That's a notable increase of 11% on last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at S$684k.
For comparison, other companies in the industry with market capitalizations below S$269m, reported a median total CEO compensation of S$130k. This suggests that Soo Peng Lim is paid more than the median for the industry. Moreover, Soo Peng Lim also holds S$24m worth of Chemical Industries (Far East) stock directly under their own name, which reveals to us that they have a significant personal stake in the company.
Speaking on an industry level, nearly 84% of total compensation represents salary, while the remainder of 16% is other remuneration. Chemical Industries (Far East) pays a modest slice of remuneration through salary, as compared to the broader industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.
A Look at Chemical Industries (Far East) Limited's Growth Numbers
Over the last three years, Chemical Industries (Far East) Limited has shrunk its earnings per share by 8.7% per year. In the last year, its revenue is down 4.0%.
Overall this is not a very positive result for shareholders. This is compounded by the fact revenue is actually down on last year. These factors suggest that the business performance wouldn't really justify a high pay packet 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 Chemical Industries (Far East) Limited Been A Good Investment?
Given the total shareholder loss of 12% over three years, many shareholders in Chemical Industries (Far East) Limited are probably rather dissatisfied, to say the least. This suggests it would be unwise for the company to pay the CEO too generously.
As previously discussed, Soo Peng is compensated more than what is normal for CEOs of companies of similar size, and which belong to the same industry. Unfortunately, this doesn't look great when you see shareholder returns have been negative over the last three years. Arguably worse, we've been waiting for positive EPS growth for the last three years. Understandably, the company's shareholders might have some questions about the CEO's remuneration, given the disappointing performance.
CEO pay is simply one of the many factors that need to be considered while examining business performance. We did our research and identified 3 warning signs (and 1 which is significant) in Chemical Industries (Far East) we think you should know about.
Switching gears from Chemical Industries (Far East), 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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