We Think Hap Seng Consolidated Berhad's (KLSE:HAPSENG) CEO Compensation Package Needs To Be Put Under A Microscope

Key Insights

• Hap Seng Consolidated Berhad will host its Annual General Meeting on 28th of May
• Total pay for CEO Edward Lee includes RM2.31m salary
• Total compensation is 897% above industry average
• Hap Seng Consolidated Berhad's EPS declined by 10% over the past three years while total shareholder loss over the past three years was 55%

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The results at Hap Seng Consolidated Berhad (KLSE:HAPSENG) have been quite disappointing recently and CEO Edward Lee 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 28th of May. It would also be an opportunity for shareholders to influence management through voting on company resolutions such as executive remuneration, which could impact the firm significantly. We present the case why we think CEO compensation is out of sync with company performance.

Check out our latest analysis for Hap Seng Consolidated Berhad

Comparing Hap Seng Consolidated Berhad's CEO Compensation With The Industry

At the time of writing, our data shows that Hap Seng Consolidated Berhad has a market capitalization of RM7.0b, and reported total annual CEO compensation of RM3.9m for the year to December 2024. We note that's a small decrease of 4.9% on last year. Notably, the salary which is RM2.31m, represents a considerable chunk of the total compensation being paid.

On comparing similar companies from the Malaysia Industrials industry with market caps ranging from RM4.3b to RM14b, we found that the median CEO total compensation was RM392k. Accordingly, our analysis reveals that Hap Seng Consolidated Berhad pays Edward Lee north of the industry median.

On an industry level, around 59% of total compensation represents salary and 41% is other remuneration. Our data reveals that Hap Seng Consolidated 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 Hap Seng Consolidated Berhad's Growth Numbers

Hap Seng Consolidated Berhad has reduced its earnings per share by 10% a year over the last three years. Its revenue is down 7.5% over the previous year.

The decline in EPS is a bit concerning. 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. We don't have analyst forecasts, but you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.

Has Hap Seng Consolidated Berhad Been A Good Investment?

The return of -55% over three years would not have pleased Hap Seng Consolidated Berhad shareholders. So shareholders would probably want the company to be less generous with CEO compensation.

To Conclude...

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, they can question the management's plans and strategies to turn performance around and reassess their investment thesis in regards to the company.

CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. We did our research and identified 2 warning signs (and 1 which doesn't sit too well with us) in Hap Seng Consolidated Berhad we think you should know about.

Switching gears from Hap Seng Consolidated 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.