How Should Investors React To Khong Guan Limited's (SGX:K03) CEO Pay?

Simply Wall St

In 2007 Soo Eng Chew was appointed CEO of Khong Guan Limited (SGX:K03). This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. Next, we'll consider growth that the business demonstrates. And finally - as a second measure of performance - we will look at the returns shareholders have received over the last few years. This method should give us information to assess how appropriately the company pays the CEO.

See our latest analysis for Khong Guan

How Does Soo Eng Chew's Compensation Compare With Similar Sized Companies?

According to our data, Khong Guan Limited has a market capitalization of S$51m, and pays its CEO total annual compensation worth S$496k. (This figure is for the year to July 2018). While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at S$376k. We took a group of companies with market capitalizations below S$275m, and calculated the median CEO total compensation to be S$384k.

So Soo Eng Chew is paid around the average of the companies we looked at. While this data point isn't particularly informative alone, it gains more meaning when considered with business performance.

You can see a visual representation of the CEO compensation at Khong Guan, below.

SGX:K03 CEO Compensation, September 19th 2019

Is Khong Guan Limited Growing?

Khong Guan Limited has increased its earnings per share (EPS) by an average of 9.6% a year, over the last three years (using a line of best fit). Its revenue is up 14% over last year.

I would argue that the modest growth in revenue is a notable positive. And, while modest, the earnings per share growth is noticeable. Although we'll stop short of calling the stock a top performer, we think the company has potential. 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 Khong Guan Limited Been A Good Investment?

Given the total loss of 6.5% over three years, many shareholders in Khong Guan Limited are probably rather dissatisfied, to say the least. So shareholders would probably think the company shouldn't be too generous with CEO compensation.

In Summary...

Soo Eng Chew is paid around the same as most CEOs of similar size companies.

The per share growth could be better, in our view. And it's hard to argue that the returns over the last three years have delighted. So it would take a bold person to suggest the pay is too modest. So you may want to check if insiders are buying Khong Guan shares with their own money (free access).

Important note: Khong Guan may not be the best stock to buy. You might find something better in this list of interesting companies with high ROE and low debt.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.