Yahoo Finance Here's Why Shareholders Should Examine InnoTek Limited's (SGX:M14) CEO Compensation Package More Closely
Key Insights
InnoTek will host its Annual General Meeting on 26th of April
CEO Yiliang Lou's total compensation includes salary of S$514.5k
Total compensation is similar to the industry average
Over the past three years, InnoTek's EPS fell by 31% and over the past three years, the total loss to shareholders 41%
The results at InnoTek Limited (SGX:M14) have been quite disappointing recently and CEO Yiliang Lou bears some responsibility for this. At the upcoming AGM on 26th of April, shareholders can hear from the board including their plans for turning around performance. They will also get a chance to influence managerial decision-making through voting on resolutions such as executive remuneration, which may impact firm value in the future. From our analysis, we think CEO compensation may need a review in light of the recent performance.
View our latest analysis for InnoTek
Comparing InnoTek Limited's CEO Compensation With The Industry
According to our data, InnoTek Limited has a market capitalization of S$120m, and paid its CEO total annual compensation worth S$559k over the year to December 2023. That's mostly flat as compared to the prior year's compensation. In particular, the salary of S$514.5k, makes up a huge portion of the total compensation being paid to the CEO.
For comparison, other companies in the Singaporean Machinery industry with market capitalizations below S$272m, reported a median total CEO compensation of S$559k. This suggests that InnoTek remunerates its CEO largely in line with the industry average. Moreover, Yiliang Lou also holds S$16m worth of InnoTek stock directly under their own name, which reveals to us that they have a significant personal stake in the company.
Component | 2023 | 2022 | Proportion (2023) |
Salary | S$514k | S$458k | 92% |
Other | S$45k | S$114k | 8% |
Total Compensation | S$559k | S$572k | 100% |
On an industry level, around 85% of total compensation represents salary and 15% is other remuneration. Although there is a difference in how total compensation is set, InnoTek more or less reflects the market in terms of setting the salary. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.
A Look at InnoTek Limited's Growth Numbers
Over the last three years, InnoTek Limited has shrunk its earnings per share by 31% per year. In the last year, its revenue is up 10%.
Overall this is not a very positive result for shareholders. And while it's good to see some good revenue growth recently, the growth isn't really fast enough for us to put aside my concerns around EPS. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.
Has InnoTek Limited Been A Good Investment?
The return of -41% over three years would not have pleased InnoTek Limited shareholders. Therefore, it might be upsetting for shareholders if the CEO were paid generously.
To Conclude...
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, management will get a chance to explain how they plan to get the business back on track and address the concerns from investors.
We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. In our study, we found 3 warning signs for InnoTek you should be aware of, and 2 of them are a bit unpleasant.
Switching gears from InnoTek, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
