Does AWC Berhad's (KLSE:AWC) CEO Salary Compare Well With Industry Peers?

Ahmad Bin Mohamed Nagoor became the CEO of AWC Berhad (KLSE:AWC) in 2013, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.

See our latest analysis for AWC Berhad

How Does Total Compensation For Ahmad Bin Mohamed Nagoor Compare With Other Companies In The Industry?

Our data indicates that AWC Berhad has a market capitalization of RM158m, and total annual CEO compensation was reported as RM4.3m for the year to June 2020. We note that's an increase of 19% above last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at RM1.8m.

For comparison, other companies in the industry with market capitalizations below RM810m, reported a median total CEO compensation of RM900k. Accordingly, our analysis reveals that AWC Berhad pays Ahmad Bin Mohamed Nagoor north of the industry median. Furthermore, Ahmad Bin Mohamed Nagoor directly owns RM50m worth of shares in the company, implying that they are deeply invested in the company's success.

Talking in terms of the industry, salary represented approximately 80% of total compensation out of all the companies we analyzed, while other remuneration made up 20% of the pie. In AWC Berhad's case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

AWC Berhad's Growth

Over the last three years, AWC Berhad has shrunk its earnings per share by 56% per year. In the last year, its revenue is down 14%.

The decline in EPS is a bit concerning. And the fact that revenue is down year on year arguably paints an ugly picture. 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 AWC Berhad Been A Good Investment?

Given the total shareholder loss of 46% over three years, many shareholders in AWC Berhad are probably rather dissatisfied, to say the least. So shareholders would probably want the company to be lessto generous with CEO compensation.

To Conclude...

As previously discussed, Ahmad is compensated more than what is normal for CEOs of companies of similar size, and which belong to the same industry. Disappointingly, share price gains over the last three years have failed to materialize. Arguably worse, we've been waiting for positive EPS growth for the last three years. Understandably, the company's shareholders might have some questions about the CEO's remuneration, given the disappointing performance.

CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. We did our research and spotted 3 warning signs for AWC Berhad that investors should look into moving forward.

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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