Here's Why Shareholders Should Examine British American Tobacco (Malaysia) Berhad's (KLSE:BAT) CEO Compensation Package More Closely

Key Insights

• British American Tobacco (Malaysia) Berhad's Annual General Meeting to take place on 8th of May
• Total pay for CEO Nedal Salem includes RM1.11m salary
• The overall pay is 114% above the industry average
• British American Tobacco (Malaysia) Berhad's three-year loss to shareholders was 28% while its EPS was down 7.0% over the past three years

British American Tobacco (Malaysia) Berhad (KLSE:BAT) has not performed well recently and CEO Nedal Salem will probably need to up their game. Shareholders can take the chance to hold the board and management accountable for the unsatisfactory performance at the next AGM on 8th of May. This will be also be a chance where they can challenge the board on company direction and vote on resolutions such as executive remuneration. The data we present below explains why we think CEO compensation is not consistent with recent performance.

View our latest analysis for British American Tobacco (Malaysia) Berhad

Comparing British American Tobacco (Malaysia) Berhad's CEO Compensation With The Industry

According to our data, British American Tobacco (Malaysia) Berhad has a market capitalization of RM2.4b, and paid its CEO total annual compensation worth RM3.7m over the year to December 2023. We note that's an increase of 60% above last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at RM1.1m.

On examining similar-sized companies in the Malaysia Tobacco industry with market capitalizations between RM954m and RM3.8b, we discovered that the median CEO total compensation of that group was RM1.7m. Hence, we can conclude that Nedal Salem is remunerated higher than the industry median.

Component	2023	2022	Proportion (2023)
Salary	RM1.1m	RM988k	30%
Other	RM2.6m	RM1.3m	70%
Total Compensation	RM3.7m	RM2.3m	100%

On an industry level, around 30% of total compensation represents salary and 70% is other remuneration. Although there is a difference in how total compensation is set, British American Tobacco (Malaysia) Berhad more or less reflects the market in terms of setting the salary. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

British American Tobacco (Malaysia) Berhad's Growth

Over the last three years, British American Tobacco (Malaysia) Berhad has shrunk its earnings per share by 7.0% per year. Its revenue is down 9.0% over the previous year.

Overall this is not a very positive result for shareholders. And the fact that revenue is down year on year arguably paints an ugly picture. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has British American Tobacco (Malaysia) Berhad Been A Good Investment?

Since shareholders would have lost about 28% over three years, some British American Tobacco (Malaysia) Berhad investors would surely be feeling negative emotions. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

To Conclude...

Not only have shareholders not seen a favorable return on their investment, but the business hasn't performed well either. Few shareholders would be willing to award the CEO with a pay raise. 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. That's why we did some digging and identified 2 warning signs for British American Tobacco (Malaysia) Berhad that investors should think about before committing capital to this 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.