Here's Why Shareholders May Want To Be Cautious With Increasing Favelle Favco Berhad's (KLSE:FAVCO) CEO Pay Packet

Key Insights

• Favelle Favco Berhad's Annual General Meeting to take place on 26th of June
• CEO Chung Mac's total compensation includes salary of RM560.0k
• The overall pay is 410% above the industry average
• Favelle Favco Berhad's total shareholder return over the past three years was 7.4% while its EPS grew by 6.9% over the past three years

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Under the guidance of CEO Chung Mac, Favelle Favco Berhad (KLSE:FAVCO) has performed reasonably well recently. As shareholders go into the upcoming AGM on 26th of June, CEO compensation will probably not be their focus, but rather the steps management will take to continue the growth momentum. However, some shareholders will still be cautious of paying the CEO excessively.

Check out our latest analysis for Favelle Favco Berhad

How Does Total Compensation For Chung Mac Compare With Other Companies In The Industry?

Our data indicates that Favelle Favco Berhad has a market capitalization of RM395m, and total annual CEO compensation was reported as RM887k for the year to December 2024. We note that's an increase of 8.3% above last year. We note that the salary portion, which stands at RM560.0k constitutes the majority of total compensation received by the CEO.

For comparison, other companies in the Malaysian Machinery industry with market capitalizations below RM852m, reported a median total CEO compensation of RM174k. Hence, we can conclude that Chung Mac is remunerated higher than the industry median. What's more, Chung Mac holds RM6.9m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

On an industry level, roughly 76% of total compensation represents salary and 24% is other remuneration. It's interesting to note that Favelle Favco Berhad allocates a smaller portion of compensation to salary in comparison to the broader industry. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.

A Look at Favelle Favco Berhad's Growth Numbers

Favelle Favco Berhad's earnings per share (EPS) grew 6.9% per year over the last three years. In the last year, its revenue is up 10%.

This revenue growth could really point to a brighter future. And the modest growth in EPS isn't bad, either. Although we'll stop short of calling the stock a top performer, we think the company has potential. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Favelle Favco Berhad Been A Good Investment?

Favelle Favco Berhad has generated a total shareholder return of 7.4% over three years, so most shareholders wouldn't be too disappointed. Although, there's always room to improve. As a result, investors in the company might be reluctant about agreeing to increase CEO pay in the future, before seeing an improvement on their returns.

In Summary...

Seeing that the company has put up a decent performance, only a few shareholders, if any at all, might have questions about the CEO pay in the upcoming AGM. However, if the board proposes to increase the compensation, some shareholders might have questions given that the CEO is already being paid higher than the industry.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. We identified 3 warning signs for Favelle Favco Berhad (1 is a bit unpleasant!) that you should be aware of before investing here.

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.