Shareholders May Be Wary Of Increasing Public Bank Berhad's (KLSE:PBBANK) CEO Compensation Package

Public Bank Berhad (KLSE:PBBANK) has not performed well recently and CEO Ah Lek Tay will probably need to up their game. Shareholders will be interested in what the board will have to say about turning performance around at the next AGM on 24 May 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.

See our latest analysis for Public Bank Berhad

How Does Total Compensation For Ah Lek Tay Compare With Other Companies In The Industry?

At the time of writing, our data shows that Public Bank Berhad has a market capitalization of RM80b, and reported total annual CEO compensation of RM37m for the year to December 2020. That's a modest increase of 6.5% on the prior year. While we always look at total compensation first, our analysis shows that the salary component is less, at RM11m.

For comparison, other companies in the industry with market capitalizations above RM33b, reported a median total CEO compensation of RM1.7m. Accordingly, our analysis reveals that Public Bank Berhad pays Ah Lek Tay north of the industry median. Moreover, Ah Lek Tay also holds RM134m worth of Public Bank Berhad stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Talking in terms of the industry, salary represented approximately 58% of total compensation out of all the companies we analyzed, while other remuneration made up 42% of the pie. It's interesting to note that Public Bank Berhad allocates a smaller portion of compensation to salary in comparison to the broader industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

Public Bank Berhad's Growth

Over the last three years, Public Bank Berhad has shrunk its earnings per share by 3.6% per year. In the last year, its revenue is down 5.2%.

The decline in EPS is a bit concerning. And the impression is worse when you consider revenue is down year-on-year. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. 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 Public Bank Berhad Been A Good Investment?

Given the total shareholder loss of 6.1% over three years, many shareholders in Public Bank Berhad are probably rather dissatisfied, to say the least. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

To Conclude...

Not only have shareholders not seen a favorable return on their investment, but the business hasn't performed well either. Few shareholders would be willing to award the CEO with a pay raise. At the upcoming AGM, the board will get the chance to explain the steps it plans to take to improve business performance.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. In our study, we found 2 warning signs for Public Bank Berhad you should be aware of, and 1 of them can't be ignored.

Important note: Public Bank Berhad is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.

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