Here's Why It's Unlikely That Malayan Banking Berhad's (KLSE:MAYBANK) CEO Will See A Pay Rise This Year

Malayan Banking Berhad (KLSE:MAYBANK) has not performed well recently and CEO Abdul Bin Alias will probably need to up their game. Shareholders can take the chance to hold the board and management accountable for the unsatisfactory performance at the next AGM on 15 April 2021. This will be also be a chance where they can challenge the board on company direction and vote on resolutions such as executive remuneration. From our analysis, we think CEO compensation may need a review in light of the recent performance.

Check out our latest analysis for Malayan Banking Berhad

Comparing Malayan Banking Berhad's CEO Compensation With the industry

Our data indicates that Malayan Banking Berhad has a market capitalization of RM97b, and total annual CEO compensation was reported as RM7.9m for the year to December 2020. That's a modest increase of 4.7% on the prior year. We think total compensation is more important but our data shows that the CEO salary is lower, at RM2.8m.

On comparing similar companies in the industry with market capitalizations above RM33b, we found that the median total CEO compensation was RM1.8m. Accordingly, our analysis reveals that Malayan Banking Berhad pays Abdul Bin Alias north of the industry median. Furthermore, Abdul Bin Alias directly owns RM5.5m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2020	2019	Proportion (2020)
Salary	RM2.8m	RM2.8m	35%
Other	RM5.2m	RM4.8m	65%
Total Compensation	RM7.9m	RM7.6m	100%

Speaking on an industry level, nearly 58% of total compensation represents salary, while the remainder of 42% is other remuneration. Malayan Banking Berhad sets aside a smaller share of compensation for salary, in comparison to the overall industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

Malayan Banking Berhad's Growth

Over the last three years, Malayan Banking Berhad has shrunk its earnings per share by 7.2% per year. It saw its revenue drop 12% over the last year.

The decline in EPS is a bit concerning. And the impression is worse when you consider revenue is down year-on-year. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.

Has Malayan Banking Berhad Been A Good Investment?

With a three year total loss of 5.2% for the shareholders, Malayan Banking Berhad would certainly have some dissatisfied shareholders. So shareholders would probably want the company to be less generous with CEO compensation.

In Summary...

Along with the business performing poorly, shareholders have suffered with poor share price returns on their investments, suggesting that there's little to no chance of them being in favor of a CEO pay raise. At the upcoming AGM, they can question the management's plans and strategies to turn performance around and reassess their investment thesis in regards to the company.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. We did our research and identified 2 warning signs (and 1 which doesn't sit too well with us) in Malayan Banking Berhad we think you should know about.

Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies that have HIGH return on equity and low debt.

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This article by Simply Wall St is general in nature. 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.
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