Should Shareholders Reconsider Ahmad Zaki Resources Berhad's (KLSE:AZRB) CEO Compensation Package?

Key Insights

• Ahmad Zaki Resources Berhad to hold its Annual General Meeting on 12th of December
• Salary of RM766.9k is part of CEO Wan bin Haji Wan Muda's total remuneration
• The overall pay is comparable to the industry average
• Over the past three years, Ahmad Zaki Resources Berhad's EPS fell by 7.9% and over the past three years, the total loss to shareholders 24%

The results at Ahmad Zaki Resources Berhad (KLSE:AZRB) have been quite disappointing recently and CEO Wan bin Haji Wan Muda bears some responsibility for this. Shareholders can take the chance to hold the board and management accountable for the unsatisfactory performance at the next AGM on 12th of December. They will also get a chance to influence managerial decision-making through voting on resolutions such as executive remuneration, which may impact firm value in the future. The data we present below explains why we think CEO compensation is not consistent with recent performance.

Check out our latest analysis for Ahmad Zaki Resources Berhad

Comparing Ahmad Zaki Resources Berhad's CEO Compensation With The Industry

Our data indicates that Ahmad Zaki Resources Berhad has a market capitalization of RM125m, and total annual CEO compensation was reported as RM815k for the year to June 2023. Notably, that's a decrease of 35% over the year before. Notably, the salary which is RM766.9k, represents most of the total compensation being paid.

On comparing similar-sized companies in the Malaysian Construction industry with market capitalizations below RM933m, we found that the median total CEO compensation was RM653k. This suggests that Ahmad Zaki Resources Berhad remunerates its CEO largely in line with the industry average. Furthermore, Wan bin Haji Wan Muda directly owns RM995k worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2023	2022	Proportion (2023)
Salary	RM767k	RM1.2m	94%
Other	RM48k	RM43k	6%
Total Compensation	RM815k	RM1.2m	100%

On an industry level, around 86% of total compensation represents salary and 14% is other remuneration. There isn't a significant difference between Ahmad Zaki Resources Berhad and the broader market, in terms of salary allocation in the overall compensation package. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

A Look at Ahmad Zaki Resources Berhad's Growth Numbers

Over the last three years, Ahmad Zaki Resources Berhad has shrunk its earnings per share by 7.9% per year. In the last year, its revenue is down 31%.

Overall this is not a very positive result for shareholders. 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. While we don't have analyst forecasts for the company, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.

Has Ahmad Zaki Resources Berhad Been A Good Investment?

Since shareholders would have lost about 24% over three years, some Ahmad Zaki Resources Berhad investors would surely be feeling negative emotions. 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, management will get a chance to explain how they plan to get the business back on track and address the concerns from investors.

CEO pay is simply one of the many factors that need to be considered while examining business performance. In our study, we found 4 warning signs for Ahmad Zaki Resources Berhad you should be aware of, and 1 of them makes us a bit uncomfortable.

Switching gears from Ahmad Zaki Resources Berhad, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.

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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.