What Can We Learn About Chemical Industries (Far East)'s (SGX:C05) CEO Compensation?

Soo Peng Lim is the CEO of Chemical Industries (Far East) Limited (SGX:C05), and in this article, we analyze the executive's compensation package with respect to the overall performance of the company. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.

View our latest analysis for Chemical Industries (Far East)

How Does Total Compensation For Soo Peng Lim Compare With Other Companies In The Industry?

At the time of writing, our data shows that Chemical Industries (Far East) Limited has a market capitalization of S$54m, and reported total annual CEO compensation of S$1.5m for the year to March 2020. That's a notable increase of 11% on last year. While we always look at total compensation first, our analysis shows that the salary component is less, at S$684k.

On comparing similar-sized companies in the industry with market capitalizations below S$265m, we found that the median total CEO compensation was S$118k. This suggests that Soo Peng Lim is paid more than the median for the industry. Furthermore, Soo Peng Lim directly owns S$25m worth of shares in the company, implying that they are deeply invested in the company's success.

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. In Chemical Industries (Far East)'s case, non-salary compensation represents a greater slice of total remuneration, in comparison 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.

Chemical Industries (Far East) Limited's Growth

Chemical Industries (Far East) Limited has reduced its earnings per share by 8.7% a year over the last three years. Its revenue is down 4.0% over the previous year.

Few shareholders would be pleased to read that EPS have declined. And the fact that revenue is down year on year arguably paints an ugly picture. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. We don't have analyst forecasts, but you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.

Has Chemical Industries (Far East) Limited Been A Good Investment?

Since shareholders would have lost about 1.0% over three years, some Chemical Industries (Far East) Limited investors would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

As we touched on above, Chemical Industries (Far East) Limited is currently paying its CEO higher than the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. Unfortunately, this doesn't look great when you see shareholder returns have been negative over the last three years. 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.

CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. That's why we did our research, and identified 4 warning signs for Chemical Industries (Far East) (of which 1 makes us a bit uncomfortable!) that you should know about in order to have a holistic understanding of the stock.

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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