Some company have paid out high remuneration to directors. Are you agree that? Based on calculation, in Malaysia if you pay out RM1 million as directors' remuneration, means that the company should have turnover of RM33 million above p.a.to support because our local FD interest rate about 3% p.a.
If the turnover generated profit lower than interest income which derived from FD, it seems company held the high risk on investment or should consider cease the business activities and so the funds should place it as FD to maintain such high cost of remuneration. Otherwise, the cost of investment definitely higher than normal. So, ordinary people indirect convince that company business sustainable and also mislead someone thought company is performing well and steady..
Basis ratio like gearing or return on capital employed does not give a good reference for evaluation of company performance. From the annual report, if you use interest rate to compared with Profit after Tax on company performance. You should able understand more on current shares price is it really valuable for you to buy in because it has reflect the actual return of the company. If it is still lower than normal FD interest rate and so you found that the low turnover with high pay of remuneration. It means that the directors not proven their ability enough to the company. Because the say funds should place it into FD to secure the minimum return rather than you take high risk on investments.
Some company said that without the contribution from such CEO or directors. Company hardly to achieve so high turnover. But if you use such capital in hand invest into FD, the return is almost as high turnover. What is the effort have been contributed by such directors or CEO? Just a old man can do so and earn the same amount of profit. Why we need to pay so high remuneration to them?
Some company said that without the contribution from such CEO or directors. Company hardly to achieve so high turnover. But if you use such capital in hand invest into FD, the return is almost as high turnover. What is the effort have been contributed by such directors or CEO? Just a old man can do so and earn the same amount of profit. Why we need to pay so high remuneration to them?