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Is Yeo Hiap Seng Limited (SGX:Y03) Excessively Paying Its CEO?

Asher Wright

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Melvin Teo became the CEO of Yeo Hiap Seng Limited (SGX:Y03) 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. The aim of all this is to consider the appropriateness of CEO pay levels.

See our latest analysis for Yeo Hiap Seng

How Does Melvin Teo’s Compensation Compare With Similar Sized Companies?

According to our data, Yeo Hiap Seng Limited has a market capitalization of S$557m, and pays its CEO total annual compensation worth S$1.5m. (This is based on the year to 2017). We think total compensation is more important but we note that the CEO salary is lower, at S$680k. When we examined a selection of companies with market caps ranging from S$270m to S$1.1b, we found the median CEO compensation was S$628k.

As you can see, Melvin Teo is paid more than the median CEO pay at companies of a similar size, in the same market. However, this does not necessarily mean Yeo Hiap Seng Limited is paying too much. We can get a better idea of how generous the pay is by looking at the performance of the underlying business.

The graphic below shows how CEO compensation at Yeo Hiap Seng has changed from year to year.

SGX:Y03 CEO Compensation, February 22nd 2019

Is Yeo Hiap Seng Limited Growing?

Yeo Hiap Seng Limited has increased its earnings per share (EPS) by an average of 15% a year, over the last three years (using a line of best fit). In the last year, its revenue is up 1.5%.

This shows that the company has improved itself over the last few years. Good news for shareholders. It’s nice to see a little revenue growth, as this is consistent with healthy business conditions. Although we don’t have analyst forecasts, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.

Has Yeo Hiap Seng Limited Been A Good Investment?

Since shareholders would have lost about 20% over three years, some Yeo Hiap Seng Limited shareholders would surely be feeling negative emotions. It therefore might be upsetting for shareholders if the CEO were paid generously.

In Summary…

We compared total CEO remuneration at Yeo Hiap Seng Limited with the amount paid at companies with a similar market capitalization. Our data suggests that it pays above the median CEO pay within that group.

Importantly, though, the company has impressed with its earnings per share growth, over three years. On the other hand returns to investors over the same period have probably disappointed many. One might thus conclude that it would be better if the company waited until growth is reflected in the share price, before increasing CEO compensation. So you may want to check if insiders are buying Yeo Hiap Seng shares with their own money (free access).

Important note: Yeo Hiap Seng 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.