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Is Fraser and Neave, Limited's (SGX:F99) CEO Salary Justified?

Simply Wall St
·3 min read

Meng Tat Lee became the CEO of Fraser and Neave, Limited (SGX:F99) in 2015. 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 process should give us an idea about how appropriately the CEO is paid.

See our latest analysis for Fraser and Neave

How Does Meng Tat Lee's Compensation Compare With Similar Sized Companies?

At the time of writing, our data says that Fraser and Neave, Limited has a market cap of S$2.3b, and reported total annual CEO compensation of S$1.3m for the year to September 2018. While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at S$765k. We looked at a group of companies with market capitalizations from S$1.4b to S$4.5b, and the median CEO total compensation was S$2.1m.

Most shareholders would consider it a positive that Meng Tat Lee takes less total compensation than the CEOs of most similar size companies, leaving more for shareholders. However, before we heap on the praise, we should delve deeper to understand business performance.

You can see, below, how CEO compensation at Fraser and Neave has changed over time.

SGX:F99 CEO Compensation, March 2nd 2020
SGX:F99 CEO Compensation, March 2nd 2020

Is Fraser and Neave, Limited Growing?

On average over the last three years, Fraser and Neave, Limited has shrunk earnings per share by 49% each year (measured with a line of best fit). Its revenue is up 5.8% over last year.

Sadly for shareholders, earnings per share are actually down, over three years. The fairly low revenue growth fails to impress given that the earnings per share is down. So given this relatively weak performance, shareholders would probably not want to see high compensation 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 Fraser and Neave, Limited Been A Good Investment?

Since shareholders would have lost about 14% over three years, some Fraser and Neave, Limited shareholders would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

Fraser and Neave, Limited is currently paying its CEO below what is normal for companies of its size.

Meng Tat Lee is paid less than CEOs of similar size companies, but the company isn't growing and total shareholder returns have been disappointing. While one could argue it is appropriate for the CEO to be paid less than other CEOs of similar sized companies, given company performance, we would not call the pay overly generous. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling Fraser and Neave (free visualization of insider trades).

If you want to buy a stock that is better than Fraser and Neave, this free list of high return, low debt companies is a great place to look.

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.

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. Thank you for reading.