What Does Computer Forms (Malaysia) Berhad's (KLSE:CFM) CEO Pay Reveal?

The CEO of Computer Forms (Malaysia) Berhad (KLSE:CFM) is Muhayuddin Bin Musa, and this article examines the executive's compensation against the backdrop of overall company performance. This analysis will also assess whether Computer Forms (Malaysia) Berhad pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

View our latest analysis for Computer Forms (Malaysia) Berhad

How Does Total Compensation For Muhayuddin Bin Musa Compare With Other Companies In The Industry?

At the time of writing, our data shows that Computer Forms (Malaysia) Berhad has a market capitalization of RM76m, and reported total annual CEO compensation of RM478k for the year to March 2020. That is, the compensation was roughly the same as last year. In particular, the salary of RM409.5k, makes up a huge portion of the total compensation being paid to the CEO.

On comparing similar-sized companies in the industry with market capitalizations below RM818m, we found that the median total CEO compensation was RM478k. From this we gather that Muhayuddin Bin Musa is paid around the median for CEOs in the industry.

Speaking on an industry level, nearly 83% of total compensation represents salary, while the remainder of 17% is other remuneration. Computer Forms (Malaysia) 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.

Computer Forms (Malaysia) Berhad's Growth

Over the last three years, Computer Forms (Malaysia) Berhad has shrunk its earnings per share by 11% per year. In the last year, its revenue is down 9.5%.

Few shareholders would be pleased to read that EPS have declined. This is compounded by the fact revenue is actually down on last year. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Computer Forms (Malaysia) Berhad Been A Good Investment?

We think that the total shareholder return of 68%, over three years, would leave most Computer Forms (Malaysia) Berhad shareholders smiling. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

To Conclude...

As we touched on above, Computer Forms (Malaysia) Berhad is currently paying a compensation that's close to the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. Some investors may take issue with this, especially considering shrinking EPS for the past three years. On the flip side, shareholder returns have been strong over the same time, which is certainly a positive sign. We wouldn't say CEO compensation is too high, but shrinking EPS is undoubtedly an issue that will have to be addressed.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. In our study, we found 3 warning signs for Computer Forms (Malaysia) Berhad you should be aware of, and 2 of them can't be ignored.

Important note: Computer Forms (Malaysia) 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.

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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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