Here's Why It's Unlikely That Zhulian Corporation Berhad's (KLSE:ZHULIAN) CEO Will See A Pay Rise This Year

Key Insights

• Zhulian Corporation Berhad to hold its Annual General Meeting on 15th of May
• CEO Meng-Keat Teoh's total compensation includes salary of RM1.42m
• Total compensation is 124% above industry average
• Zhulian Corporation Berhad's EPS declined by 16% over the past three years while total shareholder loss over the past three years was 6.6%

The results at Zhulian Corporation Berhad (KLSE:ZHULIAN) have been quite disappointing recently and CEO Meng-Keat Teoh bears some responsibility for this. Shareholders will be interested in what the board will have to say about turning performance around at the next AGM on 15th of May. 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. We present the case why we think CEO compensation is out of sync with company performance.

View our latest analysis for Zhulian Corporation Berhad

How Does Total Compensation For Meng-Keat Teoh Compare With Other Companies In The Industry?

At the time of writing, our data shows that Zhulian Corporation Berhad has a market capitalization of RM649m, and reported total annual CEO compensation of RM1.7m for the year to November 2023. This was the same as last year. In particular, the salary of RM1.42m, makes up a huge portion of the total compensation being paid to the CEO.

For comparison, other companies in the Malaysia Luxury industry with market capitalizations below RM948m, reported a median total CEO compensation of RM779k. Hence, we can conclude that Meng-Keat Teoh is remunerated higher than the industry median. Furthermore, Meng-Keat Teoh directly owns RM42m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2023	2022	Proportion (2023)
Salary	RM1.4m	RM1.4m	81%
Other	RM327k	RM327k	19%
Total Compensation	RM1.7m	RM1.7m	100%

On an industry level, roughly 65% of total compensation represents salary and 35% is other remuneration. It's interesting to note that Zhulian Corporation Berhad pays out a greater portion of remuneration through salary, compared to the 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.

Zhulian Corporation Berhad's Growth

Over the last three years, Zhulian Corporation Berhad has shrunk its earnings per share by 16% per year. Its revenue is down 4.1% over the previous year.

Few shareholders would be pleased to read that EPS have declined. 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. While we don't have analyst forecasts for the company, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.

Has Zhulian Corporation Berhad Been A Good Investment?

With a three year total loss of 6.6% for the shareholders, Zhulian Corporation Berhad would certainly have some dissatisfied shareholders. So shareholders would probably want the company to be less generous with CEO compensation.

In Summary...

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

While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. That's why we did some digging and identified 2 warning signs for Zhulian Corporation Berhad that you should be aware of before investing.

Important note: Zhulian Corporation 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. 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.