It Looks Like Gadang Holdings Berhad's (KLSE:GADANG) CEO May Expect Their Salary To Be Put Under The Microscope

Key Insights

• Gadang Holdings Berhad to hold its Annual General Meeting on 8th of November
• CEO Kok Onn's total compensation includes salary of RM1.25m
• The overall pay is 112% above the industry average
• Gadang Holdings Berhad's three-year loss to shareholders was 11% while its EPS was down 45% over the past three years

Shareholders will probably not be too impressed with the underwhelming results at Gadang Holdings Berhad (KLSE:GADANG) recently. Shareholders can take the chance to hold the board and management accountable for the unsatisfactory performance at the next AGM on 8th of November. 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. We present the case why we think CEO compensation is out of sync with company performance.

Check out our latest analysis for Gadang Holdings Berhad

How Does Total Compensation For Kok Onn Compare With Other Companies In The Industry?

According to our data, Gadang Holdings Berhad has a market capitalization of RM229m, and paid its CEO total annual compensation worth RM1.4m over the year to May 2023. This means that the compensation hasn't changed much from last year. We note that the salary portion, which stands at RM1.25m constitutes the majority of total compensation received by the CEO.

For comparison, other companies in the Malaysian Construction industry with market capitalizations below RM954m, reported a median total CEO compensation of RM653k. Accordingly, our analysis reveals that Gadang Holdings Berhad pays Kok Onn north of the industry median. Moreover, Kok Onn also holds RM30m 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	2023	2022	Proportion (2023)
Salary	RM1.3m	RM1.3m	91%
Other	RM128k	RM128k	9%
Total Compensation	RM1.4m	RM1.4m	100%

Speaking on an industry level, nearly 86% of total compensation represents salary, while the remainder of 14% is other remuneration. Our data reveals that Gadang Holdings Berhad allocates salary more or less in line with the wider market. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

A Look at Gadang Holdings Berhad's Growth Numbers

Over the last three years, Gadang Holdings Berhad has shrunk its earnings per share by 45% per year. In the last year, its revenue is down 23%.

Overall this is not a very positive result for shareholders. And the fact that revenue is down year on year arguably paints an ugly picture. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. 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?

Since shareholders would have lost about 11% over three years, some Gadang Holdings Berhad investors would surely be feeling negative emotions. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

In Summary...

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, management will get a chance to explain how they plan to get the business back on track and address the concerns from investors.

CEO compensation can have a massive impact on performance, but it's just one element. That's why we did some digging and identified 1 warning sign for Gadang Holdings Berhad that you should be aware of before investing.

Important note: Gadang Holdings 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.