We Think Bursa Malaysia Berhad's (KLSE:BURSA) CEO Compensation Package Needs To Be Put Under A Microscope

Key Insights

• Bursa Malaysia Berhad to hold its Annual General Meeting on 26th of March
• CEO Muhamad Swift's total compensation includes salary of RM1.50m
• The total compensation is 57% higher than the average for the industry
• Bursa Malaysia Berhad's EPS declined by 13% over the past three years while total shareholder loss over the past three years was 5.9%

Shareholders will probably not be too impressed with the underwhelming results at Bursa Malaysia Berhad (KLSE:BURSA) recently. At the upcoming AGM on 26th of March, shareholders can hear from the board including their plans for turning around performance. 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.

See our latest analysis for Bursa Malaysia Berhad

How Does Total Compensation For Muhamad Swift Compare With Other Companies In The Industry?

Our data indicates that Bursa Malaysia Berhad has a market capitalization of RM6.0b, and total annual CEO compensation was reported as RM2.2m for the year to December 2023. This means that the compensation hasn't changed much from last year. Notably, the salary which is RM1.50m, represents most of the total compensation being paid.

On comparing similar companies from the Malaysia Capital Markets industry with market caps ranging from RM4.7b to RM15b, we found that the median CEO total compensation was RM1.4m. Accordingly, our analysis reveals that Bursa Malaysia Berhad pays Muhamad Swift north of the industry median.

Component	2023	2022	Proportion (2023)
Salary	RM1.5m	RM1.4m	68%
Other	RM704k	RM704k	32%
Total Compensation	RM2.2m	RM2.1m	100%

Speaking on an industry level, nearly 94% of total compensation represents salary, while the remainder of 6% is other remuneration. It's interesting to note that Bursa Malaysia Berhad allocates a smaller portion of compensation to salary in comparison to the broader 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.

A Look at Bursa Malaysia Berhad's Growth Numbers

Over the last three years, Bursa Malaysia Berhad has shrunk its earnings per share by 13% per year. Its revenue is up 2.2% over the last year.

Few shareholders would be pleased to read that EPS have declined. 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. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Bursa Malaysia Berhad Been A Good Investment?

Since shareholders would have lost about 5.9% over three years, some Bursa Malaysia Berhad investors would surely be feeling negative emotions. So shareholders would probably want the company to be less generous with CEO compensation.

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.

CEO compensation can have a massive impact on performance, but it's just one element. We did our research and spotted 2 warning signs for Bursa Malaysia Berhad that investors should look into moving forward.

Switching gears from Bursa Malaysia Berhad, 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.