Shareholders May Find It Hard To Justify Increasing Muhibbah Engineering (M) Bhd.'s (KLSE:MUHIBAH) CEO Compensation For Now

Key Insights

• Muhibbah Engineering (M) Bhd will host its Annual General Meeting on 12th of June
• CEO Ngan Mac's total compensation includes salary of RM900.0k
• The overall pay is comparable to the industry average
• Over the past three years, Muhibbah Engineering (M) Bhd's EPS grew by 113% and over the past three years, the total loss to shareholders 3.2%

In the past three years, shareholders of Muhibbah Engineering (M) Bhd. (KLSE:MUHIBAH) have seen a loss on their investment. However, what is unusual is that EPS growth has been positive, suggesting that the share price has diverged from fundamentals. These are some of the concerns that shareholders may want to bring up at the next AGM held on 12th of June. Voting on resolutions such as executive remuneration and other matters could also be a way to influence management. We think shareholders might be reluctant to increase compensation for the CEO at the moment, according to our analysis below.

View our latest analysis for Muhibbah Engineering (M) Bhd

Comparing Muhibbah Engineering (M) Bhd.'s CEO Compensation With The Industry

At the time of writing, our data shows that Muhibbah Engineering (M) Bhd. has a market capitalization of RM705m, and reported total annual CEO compensation of RM1.1m for the year to December 2023. We note that's an increase of 35% above last year. We note that the salary portion, which stands at RM900.0k constitutes the majority of total compensation received by the CEO.

On comparing similar companies from the Malaysian Construction industry with market caps ranging from RM470m to RM1.9b, we found that the median CEO total compensation was RM919k. From this we gather that Ngan Mac is paid around the median for CEOs in the industry. Furthermore, Ngan Mac directly owns RM141m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2023	2022	Proportion (2023)
Salary	RM900k	RM655k	84%
Other	RM175k	RM141k	16%
Total Compensation	RM1.1m	RM796k	100%

Talking in terms of the industry, salary represented approximately 77% of total compensation out of all the companies we analyzed, while other remuneration made up 23% of the pie. There isn't a significant difference between Muhibbah Engineering (M) Bhd and the broader market, in terms of salary allocation in the overall compensation package. 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.

Muhibbah Engineering (M) Bhd.'s Growth

Muhibbah Engineering (M) Bhd.'s earnings per share (EPS) grew 113% per year over the last three years. Its revenue is up 49% over the last year.

This demonstrates that the company has been improving recently and is good news for the shareholders. Most shareholders would be pleased to see strong revenue growth combined with EPS growth. This combo suggests a fast growing business. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.

Has Muhibbah Engineering (M) Bhd. Been A Good Investment?

With a three year total loss of 3.2% for the shareholders, Muhibbah Engineering (M) Bhd. would certainly have some dissatisfied shareholders. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

To Conclude...

Shareholders have not seen their shares grow in value, rather they have seen their shares decline. A huge lag in share price growth when earnings have grown may indicate there could be other issues that are affecting the company at the moment that the market is focused on. Shareholders would probably be keen to find out what are the other factors could be weighing down the stock. The upcoming AGM will be a chance for shareholders 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.

If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at Muhibbah Engineering (M) Bhd.

Switching gears from Muhibbah Engineering (M) Bhd, 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.