Increases to CEO Compensation Might Be Put On Hold For Now at Gadang Holdings Berhad (KLSE:GADANG)

Key Insights

• Gadang Holdings Berhad to hold its Annual General Meeting on 6th of November
• CEO Kok Onn's total compensation includes salary of RM1.25m
• The overall pay is 76% above the industry average
• Gadang Holdings Berhad's three-year loss to shareholders was 14% while its EPS was down 37% over the past three years

In the past three years, shareholders of Gadang Holdings Berhad (KLSE:GADANG) have seen a loss on their investment. Per share earnings growth is also lacking, despite revenue growth. The AGM coming up on 6th of November will be an opportunity for shareholders to have their concerns addressed by the board and for them to exercise their influence on management through voting on resolutions such as executive remuneration. Here's why we think shareholders should hold off on a raise for the CEO at the moment.

View our latest analysis for Gadang Holdings Berhad

Comparing Gadang Holdings Berhad's CEO Compensation With The Industry

According to our data, Gadang Holdings Berhad has a market capitalization of RM256m, and paid its CEO total annual compensation worth RM1.3m over the year to May 2024. We note that's a small decrease of 5.0% on last year. We note that the salary portion, which stands at RM1.25m constitutes the majority of total compensation received by the CEO.

On comparing similar-sized companies in the Malaysian Construction industry with market capitalizations below RM876m, we found that the median total CEO compensation was RM748k. Accordingly, our analysis reveals that Gadang Holdings Berhad pays Kok Onn north of the industry median. Moreover, Kok Onn also holds RM31m worth of Gadang Holdings Berhad stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component	2024	2023	Proportion (2024)
Salary	RM1.3m	RM1.3m	95%
Other	RM59k	RM128k	5%
Total Compensation	RM1.3m	RM1.4m	100%

Talking in terms of the industry, salary represented approximately 78% of total compensation out of all the companies we analyzed, while other remuneration made up 22% of the pie. Gadang Holdings Berhad pays a high salary, concentrating more on this aspect of compensation in comparison to non-salary pay. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

Gadang Holdings Berhad's Growth

Over the last three years, Gadang Holdings Berhad has shrunk its earnings per share by 37% per year. Its revenue is up 21% over the last year.

The decrease in EPS could be a concern for some investors. But on the other hand, revenue growth is strong, suggesting a brighter future. It's hard to reach a conclusion about business performance right now. This may be one to watch. 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 Gadang Holdings Berhad Been A Good Investment?

With a three year total loss of 14% for the shareholders, Gadang Holdings Berhad would certainly have some dissatisfied shareholders. So shareholders would probably want the company to be less generous with CEO compensation.

To Conclude...

Gadang Holdings Berhad pays its CEO a majority of compensation through a salary. The company's earnings haven't grown and possibly because of that, the stock has performed poorly, resulting in a loss for the company's shareholders. Shareholders will get the chance at the upcoming AGM to question the board on key matters, such as CEO remuneration or any other issues they might have and revisit their investment thesis with regards to the company.

While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. That's why we did some digging and identified 2 warning signs for Gadang Holdings Berhad that you should be aware of before investing.

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. 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.