In 2016 Andrew Cheng was appointed CEO of Kingsmen Creatives Ltd. (SGX:5MZ). First, this article will compare CEO compensation with compensation at similar sized companies. Then we'll look at a snap shot of the business growth. And finally - as a second measure of performance - we will look at the returns shareholders have received over the last few years. This process should give us an idea about how appropriately the CEO is paid.
How Does Andrew Cheng's Compensation Compare With Similar Sized Companies?
Our data indicates that Kingsmen Creatives Ltd. is worth S$99m, and total annual CEO compensation was reported as S$689k for the year to December 2018. While we always look at total compensation first, we note that the salary component is less, at S$324k. We took a group of companies with market capitalizations below S$272m, and calculated the median CEO total compensation to be S$356k.
Thus we can conclude that Andrew Cheng receives more in total compensation than the median of a group of companies in the same market, and of similar size to Kingsmen Creatives Ltd.. However, this doesn't necessarily mean the pay is too high. We can get a better idea of how generous the pay is by looking at the performance of the underlying business.
You can see, below, how CEO compensation at Kingsmen Creatives has changed over time.
Is Kingsmen Creatives Ltd. Growing?
Over the last three years Kingsmen Creatives Ltd. has shrunk its earnings per share by an average of 27% per year (measured with a line of best fit). In the last year, its revenue is up 16%.
Sadly for shareholders, earnings per share are actually down, over three years. There's no doubt that the silver lining is that revenue is up. But it isn't sufficiently fast growth to overlook the fact that earnings per share has gone backwards over three years. 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 might want to assess this data-rich visualization of earnings, revenue and cash flow.
Has Kingsmen Creatives Ltd. Been A Good Investment?
With a three year total loss of 12%, Kingsmen Creatives Ltd. would certainly have some dissatisfied shareholders. This suggests it would be unwise for the company to pay the CEO too generously.
We compared total CEO remuneration at Kingsmen Creatives Ltd. with the amount paid at companies with a similar market capitalization. As discussed above, we discovered that the company pays more than the median of that group.
Earnings per share have not grown in three years, and the revenue growth fails to impress us. Arguably worse, investors are without a positive return for the last three years. In our opinion the CEO might be paid too generously! CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling Kingsmen Creatives (free visualization of insider trades).
If you want to buy a stock that is better than Kingsmen Creatives, this free list of high return, low debt companies is a great place to look.
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