Not talking about sheng siong here but management remmuration in general. Besides the relative size of remuneration to profits, one aspect which I find disturbing is the lack of transparency in determining the variable component of pay or bonus. Was relooking at several of the companies I owned, and realised that although directors at golden Agri earns less than 2% of annual NP for most of the years, it can be as low at 1.5 million to as high as 7 million. The marker seems to be growth rather than absolute profits.
If I want to know how they define performance, it drew a blank. But YZJ directors have been drawing less than 250k for the past 4 years and yet give good dividends. Certainly hope they stay this way
My point is we cannot simply rely on the % of renumeration to profit to judge the management. If it is so simple, does that means that the loss making companies' directors should receive zero or even negative pay? (Useless bums, pay them for what?!?!)
And also, if a certain % is reasonable, say 1%, then maybe Wee Ee Cheong should be paid $28M last year? He only drawing around $8.75M... (So unfair for him)! Then the Neos should only be paid $30,000. (I rather don't run a company with that kind of pay!)
in an efficient market, poor management should have lower stock price
however mr market has no logic, it gives SS such a high PE ratio, lol
The high PE itself is already a no no.
Why bother with such companies especially if they are family run?
of course, there are exceptions such as UOB and CDL.....
Majority are rather family oriented....if you understand what it means.
(23-09-2013, 10:23 AM)felixleong Wrote: [ -> ]in an efficient market, poor management should have lower stock price
however mr market has no logic, it gives SS such a high PE ratio, lol
Refer to your own signature.. haha..
My view of SS is as follows (based on numbers from my head).
- Net Cash position
- In a rather stable industry
- Decent dividend payout
- Lower PE compare to peer (Dairy Farm)
So, maybe it is not unreasonable? (But maybe not fantastic too)
I believe too that mgmt remuneration is one way to gauge the mgmt, but just taking a snapshot of 1 year's pay is hardly fair at all. I usually look at past reports before making an opinion. The best is if there is a down cycle and mgmt cut their bonus in line with the drop in profit.
For small caps, I think it is normal for mgmt to take up to 10-20% of NP. Time will tell if and when they become as big as diary farm and still take the same amount of pay..
For alignment with shareholders (and employees), Sheng Siong does ->
1. 90% dividend payout since listing and committed to FY13 and FY14
2. 20% PBIT profit sharing with employees
3. Free lunch for employees for >20 years
4. >70% of mgmt pay is in variable bonus. Exact amount of pay is also disclosed in AR2012 which is an improvement over AR2011.
5. No ridiculous amt of options held by mgmt (in fact no options issued at all)
Looks pretty decent to me! Any thoughts?
(23-09-2013, 10:25 AM)camelking Wrote: [ -> ]Majority are rather family oriented....if you understand what it means.
Father, mother, spouse, brothers, sisters, children, inlaws, cousins... All must take care mah....
(23-09-2013, 10:36 AM)grubb Wrote: [ -> ]I believe too that mgmt remuneration is one way to gauge the mgmt, but just taking a snapshot of 1 year's pay is hardly fair at all. I usually look at past reports before making an opinion. The best is if there is a down cycle and mgmt cut their bonus in line with the drop in profit.
For small caps, I think it is normal for mgmt to take up to 10-20% of NP. Time will tell if and when they become as big as diary farm and still take the same amount of pay..
For alignment with shareholders (and employees), Sheng Siong does ->
1. 90% dividend payout since listing and committed to FY13 and FY14
2. 20% PBIT profit sharing with employees
3. Free lunch for employees for >20 years
4. >70% of mgmt pay is in variable bonus. Exact amount of pay is also disclosed in AR2012 which is an improvement over AR2011.
5. No ridiculous amt of options held by mgmt (in fact no options issued at all)
Looks pretty decent to me! Any thoughts?
It's decent, but can the PE be closer to 10?
I think sheng shiong should follow what challenger has been doing, since both in the retail industry but one is consumer the other is IT products
challenger when its ipo at 10 cents many cows years back it gave all employees shares, the lowest was 10 lots ( free of charge, so min is 1k value)
every since they ipo, they had always paid good dividends to shareholders (since their employees are also share holders), payout has been around half of the earnings or slightly less.
challenger's CEO Mr Loo's salary is about 1 million dollars
but the dividends he receives annually is about 3 million dollars, 3 times his salary
i would be attracted to sheng shiong if they pay themself less and pay out more dividends instead, this would be most fair and the market should react well and support it with a strong stock price too
(23-09-2013, 10:45 AM)NTL Wrote: [ -> ] (23-09-2013, 10:25 AM)camelking Wrote: [ -> ]Majority are rather family oriented....if you understand what it means.
Father, mother, spouse, brothers, sisters, children, inlaws, cousins... All must take care mah....
(23-09-2013, 10:36 AM)grubb Wrote: [ -> ]I believe too that mgmt remuneration is one way to gauge the mgmt, but just taking a snapshot of 1 year's pay is hardly fair at all. I usually look at past reports before making an opinion. The best is if there is a down cycle and mgmt cut their bonus in line with the drop in profit.
For small caps, I think it is normal for mgmt to take up to 10-20% of NP. Time will tell if and when they become as big as diary farm and still take the same amount of pay..
For alignment with shareholders (and employees), Sheng Siong does ->
1. 90% dividend payout since listing and committed to FY13 and FY14
2. 20% PBIT profit sharing with employees
3. Free lunch for employees for >20 years
4. >70% of mgmt pay is in variable bonus. Exact amount of pay is also disclosed in AR2012 which is an improvement over AR2011.
5. No ridiculous amt of options held by mgmt (in fact no options issued at all)
Looks pretty decent to me! Any thoughts?
It's decent, but can the PE be closer to 10?
when sheng shiong ipo it was around 8 times earnings only and was hovering at 10 times earning for sometime, but I guess now at 20 times its really very very expensive... maybe when QE fades away and the price comes down it may be a decent buy at 12 times earnings or less?
(23-09-2013, 07:03 AM)weijian Wrote: [ -> ] (22-09-2013, 10:24 PM)NTL Wrote: [ -> ]How about seeing it as an incentive for the management to improve the results? (Hopefully not by creative accounting)
In one of the earlier postings in this thread, d.o.g had already summed it up very nicely - They ALREADY own close to 70% of the company, what other motivation is required?
But one can't deny that this is an incentive for Mgt to improve as remumeration increases with PBIT, although they will always take the first (big) bite of the pie before sharing it with the rest.
If majority owned, it is much bigger motivation for stock price to improve than minority owned. But if left unchecked or unscrupulous, the company can be used as a personal vehicle. That in essence is the pros and cons of family run business.
As I posted in another thread, if no rules on minority protection and no need to assess capital markets, logically profit would be zero with SG&A scooping up all the profits. Only those with a longer term view and larger vested interested would want to see stock price grow.
http://www.valuebuddies.com/thread-556-p...l#pid62082