MENU

3 Things Investors Should Know About Power Root Bhd’s Management

Power Root Bhd (KLSE: 7237.KL) is a food and beverage (F&B) company listed in Malaysia’s stock market, Bursa Malaysia. The company manufactures and distributes energy drinks, and ready-to-drink and instant coffee and tea products. The brands that are in Power Root’s portfolio include Power RootAlicafeAh Huat and more.

One of the things that I like to do when analysing a company is to study its track record. This is something I did in a recent article I wrote on Power Root. Another important thing about a company that I like to do is to understand its management team. In this article, I want to share three aspects of Power Root’s management that I find to be interesting.

Long tenure

Power Root was established in 1999, and there are members of the company’s management team that have been with it for 10 years or more.

For instance, Power Root’s executive deputy chairman, Dato Low Chee Yen, is one of the company’s three co-founders. The other two co-founders, Dato Wong Fuei Boon and Dato How Saw Swee, both hold the titles of Executive Director.

Having long-tenured managers means that Power Root is steered by people who likely have an intimate understanding of the business. What’s more, these folks are also likely to be really passionate about the company, since they’ve chosen to remain with the company for a long time.

Reasonable remuneration

Ideally, we want a company’s remuneration to be reasonable, so that it can attract, retain, and motivate its personnel.

For the year ending 31 March 2017 (FY2017), the total remuneration of the top four members of Power Root’s management team was RM 7.3 million. Within the quartet, one was paid RM 3.8 million while the other three were paid between RM 1.0 million to RM 1.3 million. For perspective, the top two managers of Nestle (Malaysia) Berhad (KLSE: 4707.KL) enjoyed total remuneration of around RM 5.3 million in 2017. Nestla Malaysia is the Malaysia-listed arm of the global food & beverage consumer products giant, Nestle.

As such, I think the remuneration of Power Root’s key managers is reasonable. Moreover, the total remuneration of RM 7.3 million for Power Root’s top four managers in FY2017 was just 15% of the company’s total profit in the same year.

Managers are also major shareholders

The key managers of Power Root are also major shareholders of the company. The three co-founders of Power Root collectively controlled 57.34% of the company’s shares as of 30 June 2017. Meanwhile, Wong Tak Keong, who was appointed as the drinks maker’s managing director in late February 2018, owned 8.52% of Power Root’s shares as of 30 June 2017.

In my view, this high level of ownership aligns the interests of Power Root’s key managers with the other shareholders of the company, and would thus lead the quartet to strive and make Power Root a success over the long run.

Meanwhile, there are 28 surprising and important things we think every Singaporean investor should know--and we've laid them all out in The Motley Fool Singapore's new e-book. Packed with information and insights, we believe this book will help you be a better, smarter investor. You can download the full e-book FREE of charge--simply click here now to claim your copy.

Also, like us on Facebook to follow our latest news and articles. The Motley Fool's purpose is to help the world invest, better.

The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Lawrence Nga doesn’t own shares in any companies mentioned.