Should Shareholders Reconsider CAB Cakaran Corporation Berhad's (KLSE:CAB) CEO Compensation Package?

The results at CAB Cakaran Corporation Berhad (KLSE:CAB) have been quite disappointing recently and CEO Hoon Chuah bears some responsibility for this. Shareholders can take the chance to hold the board and management accountable for the unsatisfactory performance at the next AGM on 24 March 2022. 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.

Check out our latest analysis for CAB Cakaran Corporation Berhad

How Does Total Compensation For Hoon Chuah Compare With Other Companies In The Industry?

At the time of writing, our data shows that CAB Cakaran Corporation Berhad has a market capitalization of RM349m, and reported total annual CEO compensation of RM1.2m for the year to September 2021. That's just a smallish increase of 6.3% on last year. We note that the salary portion, which stands at RM894.0k constitutes the majority of total compensation received by the CEO.

On comparing similar-sized companies in the industry with market capitalizations below RM840m, we found that the median total CEO compensation was RM540k. Accordingly, our analysis reveals that CAB Cakaran Corporation Berhad pays Hoon Chuah north of the industry median. What's more, Hoon Chuah holds RM7.2m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component	2021	2020	Proportion (2021)
Salary	RM894k	RM806k	75%
Other	RM303k	RM320k	25%
Total Compensation	RM1.2m	RM1.1m	100%

On an industry level, roughly 77% of total compensation represents salary and 23% is other remuneration. There isn't a significant difference between CAB Cakaran Corporation Berhad and the broader market, in terms of salary allocation in the overall compensation package. 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.

CAB Cakaran Corporation Berhad's Growth

Over the last three years, CAB Cakaran Corporation Berhad has shrunk its earnings per share by 62% per year. Its revenue is up 6.9% 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. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has CAB Cakaran Corporation Berhad Been A Good Investment?

With a three year total loss of 15% for the shareholders, CAB Cakaran Corporation Berhad would certainly have some dissatisfied shareholders. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

In Summary...

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, the board will get the chance to explain the steps it plans to take to improve business performance.

CEO pay is simply one of the many factors that need to be considered while examining business performance. We did our research and identified 5 warning signs (and 2 which are concerning) in CAB Cakaran Corporation Berhad we think you should know about.

Important note: CAB Cakaran 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.