We Think Shareholders May Want To Consider A Review Of Seremban Engineering Berhad's (KLSE:SEB) CEO Compensation Package

Key Insights

• Seremban Engineering Berhad's Annual General Meeting to take place on 12th of December
• CEO Wai Wong's total compensation includes salary of RM288.0k
• The overall pay is 221% above the industry average
• Over the past three years, Seremban Engineering Berhad's EPS fell by 6.2% and over the past three years, the total loss to shareholders 51%

The results at Seremban Engineering Berhad (KLSE:SEB) have been quite disappointing recently and CEO Wai Wong 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 12th of December. 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. From our analysis, we think CEO compensation may need a review in light of the recent performance.

Check out our latest analysis for Seremban Engineering Berhad

Comparing Seremban Engineering Berhad's CEO Compensation With The Industry

At the time of writing, our data shows that Seremban Engineering Berhad has a market capitalization of RM48m, and reported total annual CEO compensation of RM419k for the year to June 2024. That is, the compensation was roughly the same as last year. We note that the salary portion, which stands at RM288.0k constitutes the majority of total compensation received by the CEO.

For comparison, other companies in the Malaysian Machinery industry with market capitalizations below RM886m, reported a median total CEO compensation of RM130k. Accordingly, our analysis reveals that Seremban Engineering Berhad pays Wai Wong north of the industry median.

Component	2024	2023	Proportion (2024)
Salary	RM288k	RM289k	69%
Other	RM131k	RM133k	31%
Total Compensation	RM419k	RM422k	100%

Talking in terms of the industry, salary represented approximately 74% of total compensation out of all the companies we analyzed, while other remuneration made up 26% of the pie. Seremban Engineering Berhad is largely mirroring the industry average when it comes to the share a salary enjoys in overall compensation. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

Seremban Engineering Berhad's Growth

Over the last three years, Seremban Engineering Berhad has shrunk its earnings per share by 6.2% per year. It achieved revenue growth of 5.3% over the last year.

Overall this is not a very positive result for shareholders. And the modest revenue growth over 12 months isn't much comfort against the reduced EPS. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. 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 Seremban Engineering Berhad Been A Good Investment?

With a total shareholder return of -51% over three years, Seremban Engineering Berhad shareholders would by and large be disappointed. So shareholders would probably want the company to be less generous with CEO compensation.

To Conclude...

Along with the business performing poorly, shareholders have suffered with poor share price returns on their investments, suggesting that there's little to no chance of them being in favor of a CEO pay raise. At the upcoming AGM, the board will get the chance to explain the steps it plans to take to improve business performance.

CEO pay is simply one of the many factors that need to be considered while examining business performance. That's why we did our research, and identified 4 warning signs for Seremban Engineering Berhad (of which 2 make us uncomfortable!) that you should know about in order to have a holistic understanding of the stock.

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.