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

The results at MGB Berhad (KLSE:MGB) have been quite disappointing recently and CEO Lit Lim 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 15 June 2021. 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. From our analysis, we think CEO compensation may need a review in light of the recent performance.

See our latest analysis for MGB Berhad

Comparing MGB Berhad's CEO Compensation With the industry

According to our data, MGB Berhad has a market capitalization of RM449m, and paid its CEO total annual compensation worth RM1.0m over the year to December 2020. That is, the compensation was roughly the same as last year. Notably, the salary which is RM924.7k, represents most of the total compensation being paid.

For comparison, other companies in the industry with market capitalizations below RM825m, reported a median total CEO compensation of RM839k. From this we gather that Lit Lim is paid around the median for CEOs in the industry. What's more, Lit Lim holds RM57m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component	2020	2019	Proportion (2020)
Salary	RM925k	RM941k	92%
Other	RM81k	RM75k	8%
Total Compensation	RM1.0m	RM1.0m	100%

On an industry level, roughly 78% of total compensation represents salary and 22% is other remuneration. MGB Berhad is paying a higher share of its remuneration through a salary in comparison to the overall 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.

MGB Berhad's Growth

Over the last three years, MGB Berhad has shrunk its earnings per share by 21% per year. Its revenue is down 18% over the previous year.

The decline in EPS is a bit concerning. And the impression is worse when you consider revenue is down year-on-year. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. 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 MGB Berhad Been A Good Investment?

Given the total shareholder loss of 3.2% over three years, many shareholders in MGB Berhad are probably rather dissatisfied, to say the least. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

Given that shareholders haven't seen any positive returns on their investment, not to mention the lack of earnings growth, this may suggest that few of them would be willing to award the CEO with a pay rise. 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.

Whatever your view on compensation, you might want to check if insiders are buying or selling MGB Berhad shares (free trial).

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. 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.
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