Shareholders May Be More Conservative With Tan Chong Motor Holdings Berhad's (KLSE:TCHONG) CEO Compensation For Now

Key Insights

• Tan Chong Motor Holdings Berhad to hold its Annual General Meeting on 29th of May
• Total pay for CEO Daniel Ho includes RM1.18m salary
• Total compensation is 327% above industry average
• Tan Chong Motor Holdings Berhad's EPS grew by 21% over the past three years while total shareholder loss over the past three years was 21%

In the past three years, the share price of Tan Chong Motor Holdings Berhad (KLSE:TCHONG) has struggled to grow and now shareholders are sitting on a loss. Despite positive EPS growth in the past few years, the share price hasn't tracked the fundamental performance of the company. These are some of the concerns that shareholders may want to bring up at the next AGM held on 29th of May. They could also try to influence management and firm direction through voting on resolutions such as executive remuneration and other company matters. Here's our take on why we think shareholders may want to be cautious of approving a raise for the CEO at the moment.

Check out our latest analysis for Tan Chong Motor Holdings Berhad

How Does Total Compensation For Daniel Ho Compare With Other Companies In The Industry?

At the time of writing, our data shows that Tan Chong Motor Holdings Berhad has a market capitalization of RM560m, and reported total annual CEO compensation of RM1.5m for the year to December 2023. That's a modest increase of 4.8% on the prior year. In particular, the salary of RM1.18m, makes up a huge portion of the total compensation being paid to the CEO.

For comparison, other companies in the Malaysia Auto industry with market capitalizations below RM939m, reported a median total CEO compensation of RM347k. This suggests that Daniel Ho is paid more than the median for the industry.

Component	2023	2022	Proportion (2023)
Salary	RM1.2m	RM1.1m	79%
Other	RM304k	RM292k	21%
Total Compensation	RM1.5m	RM1.4m	100%

On an industry level, roughly 63% of total compensation represents salary and 37% is other remuneration. Tan Chong Motor Holdings Berhad pays out 79% of remuneration in the form of a salary, significantly higher than the industry average. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

Tan Chong Motor Holdings Berhad's Growth

Tan Chong Motor Holdings Berhad's earnings per share (EPS) grew 21% per year over the last three years. It saw its revenue drop 17% over the last year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's always a tough situation when revenues are not growing, but ultimately profits are more important. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.

Has Tan Chong Motor Holdings Berhad Been A Good Investment?

Given the total shareholder loss of 21% over three years, many shareholders in Tan Chong Motor Holdings Berhad are probably rather dissatisfied, to say the least. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

In Summary...

The fact that shareholders are sitting on a loss on the value of their shares in the past few years is certainly disconcerting. The stock's movement is disjointed with the company's earnings growth, which ideally should move in the same direction. If there are some unknown variables that are influencing the stock's price, surely shareholders would have some concerns. The upcoming AGM will be a chance for shareholders to question the board on key matters, such as CEO remuneration or any other issues they might have and revisit their investment thesis with regards to the company.

So you may want to check if insiders are buying Tan Chong Motor Holdings Berhad shares with their own money (free access).

Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.

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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.