Here's Why Shareholders May Want To Be Cautious With Increasing Insas Berhad's (KLSE:INSAS) CEO Pay Packet

Key Insights

• Insas Berhad to hold its Annual General Meeting on 29th of November
• Total pay for CEO Gian Wong includes RM420.0k salary
• The total compensation is 133% higher than the average for the industry
• Over the past three years, Insas Berhad's EPS fell by 32% and over the past three years, the total loss to shareholders 2.9%

In the past three years, the share price of Insas Berhad (KLSE:INSAS) has struggled to generate growth for its shareholders. Per share earnings growth is also poor, despite revenues growing. The AGM coming up on 29th of November will be an opportunity for shareholders to have their concerns addressed by the board and for them to exercise their influence on management through voting on resolutions such as executive remuneration. Here's our take on why we think shareholders might be hesitant about approving a raise at the moment.

View our latest analysis for Insas Berhad

How Does Total Compensation For Gian Wong Compare With Other Companies In The Industry?

Our data indicates that Insas Berhad has a market capitalization of RM610m, and total annual CEO compensation was reported as RM486k for the year to June 2024. There was no change in the compensation compared to last year. Notably, the salary which is RM420.0k, represents most of the total compensation being paid.

For comparison, other companies in the Malaysia Capital Markets industry with market capitalizations below RM894m, reported a median total CEO compensation of RM209k. This suggests that Gian Wong is paid more than the median for the industry. What's more, Gian Wong holds RM550k worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component	2024	2024	Proportion (2024)
Salary	RM420k	RM420k	86%
Other	RM66k	RM66k	14%
Total Compensation	RM486k	RM486k	100%

Speaking on an industry level, nearly 92% of total compensation represents salary, while the remainder of 8% is other remuneration. Although there is a difference in how total compensation is set, Insas Berhad more or less reflects the market in terms of setting the salary. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

Insas Berhad's Growth

Over the last three years, Insas Berhad has shrunk its earnings per share by 32% per year. It achieved revenue growth of 17% over the last year.

The decrease in EPS could be a concern for some investors. On the other hand, the strong revenue growth suggests the business is growing. In conclusion we can't form a strong opinion about business performance yet; but it's one worth watching. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Insas Berhad Been A Good Investment?

Since shareholders would have lost about 2.9% over three years, some Insas Berhad investors would surely be feeling negative emotions. So shareholders would probably want the company to be less generous with CEO compensation.

To Conclude...

The returns to shareholders is disappointing along with lack of earnings growth, which goes some way in explaining the poor returns. The upcoming AGM will provide shareholders the opportunity to revisit the company’s remuneration policies and evaluate if the board’s judgement and decision-making is aligned with that of the company’s shareholders.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. We've identified 2 warning signs for Insas Berhad that investors should be aware of in a dynamic business environment.

Switching gears from Insas 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.