Posted on September 26, 2022
The underwhelming performance at Selangor Dredging Berhad (KLSE:SDRED) recently has probably not pleased shareholders. There is an opportunity for shareholders to influence management to turn the performance around by voting on resolutions such as executive remuneration at the AGM coming up on 29 September 2022. The data we gathered below shows that CEO compensation looks acceptable for now.
Comparing Selangor Dredging Berhad’s CEO Compensation With The Industry
At the time of writing, our data shows that Selangor Dredging Berhad has a market capitalization of RM185m, and reported total annual CEO compensation of RM515k for the year to March 2022. We note that’s an increase of 45% above last year. In particular, the salary of RM360.0k, makes up a huge portion of the total compensation being paid to the CEO.
On comparing similar-sized companies in the industry with market capitalizations below RM912m, we found that the median total CEO compensation was RM788k. That is to say, Lip Teh is paid under the industry median. What’s more, Lip Teh holds RM39m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.
Component 2022 2021 Proportion (2022)
Salary RM360k RM323k 70%
Other RM155k RM32k 30%
Total Compensation RM515k RM355k 100%
On an industry level, around 80% of total compensation represents salary and 20% is other remuneration. In Selangor Dredging Berhad’s case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.
KLSE:SDRED CEO Compensation September 22nd 2022
Selangor Dredging Berhad’s Growth
Over the last three years, Selangor Dredging Berhad has shrunk its earnings per share by 46% per year. It saw its revenue drop 56% over the last year.
The decline in EPS is a bit concerning. And the fact that revenue is down year on year arguably paints an ugly picture. 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 Selangor Dredging Berhad Been A Good Investment?
The return of -31% over three years would not have pleased Selangor Dredging Berhad shareholders. This suggests it would be unwise for the company to pay the CEO too generously.
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, they can question the management’s plans and strategies to turn performance around and reassess their investment thesis in regards to the company.
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. In our study, we found 3 warning signs for Selangor Dredging Berhad you should be aware of, and 1 of them shouldn’t be ignored.
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.
