We Think CAB Cakaran Corporation Berhad's (KLSE:CAB) CEO Compensation Package Needs To Be Put Under A Microscope

The results at CAB Cakaran Corporation Berhad (KLSE:CAB) have been quite disappointing recently and CEO Hoon Chuah 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 25 March 2021. 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.

See our latest analysis for CAB Cakaran Corporation Berhad

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

According to our data, CAB Cakaran Corporation Berhad has a market capitalization of RM314m, and paid its CEO total annual compensation worth RM1.1m over the year to September 2020. That's a slight decrease of 5.1% on the prior year. Notably, the salary which is RM806.0k, represents most of the total compensation being paid.

In comparison with other companies in the industry with market capitalizations under RM826m, the reported median total CEO compensation was RM636k. Hence, we can conclude that Hoon Chuah is remunerated higher than the industry median. Moreover, Hoon Chuah also holds RM6.3m worth of CAB Cakaran Corporation Berhad stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component	2020	2019	Proportion (2020)
Salary	RM806k	RM828k	72%
Other	RM320k	RM359k	28%
Total Compensation	RM1.1m	RM1.2m	100%

Talking in terms of the industry, salary represented approximately 76% of total compensation out of all the companies we analyzed, while other remuneration made up 24% of the pie. Our data reveals that CAB Cakaran Corporation Berhad allocates salary more or less in line with the wider market. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

A Look at CAB Cakaran Corporation Berhad's Growth Numbers

Over the last three years, CAB Cakaran Corporation Berhad has shrunk its earnings per share by 52% per year. In the last year, its revenue is down 4.6%.

Few shareholders would be pleased to read that EPS have declined. And the fact that revenue is down year on year arguably paints an ugly picture. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. We don't have analyst forecasts, but you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.

Has CAB Cakaran Corporation Berhad Been A Good Investment?

The return of -52% over three years would not have pleased CAB Cakaran Corporation Berhad 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.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. We did our research and identified 4 warning signs (and 2 which are a bit concerning) in CAB Cakaran Corporation Berhad we think you should know about.

Switching gears from CAB Cakaran Corporation 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.

If you decide to trade CAB Cakaran Corporation Berhad, use the lowest-cost* platform that is rated #1 Overall by Barron’s, Interactive Brokers. Trade stocks, options, futures, forex, bonds and funds on 135 markets, all from a single integrated account. Promoted

This article by Simply Wall St is general in nature. 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.
^*Interactive Brokers Rated Lowest Cost Broker by StockBrokers.com Annual Online Review 2020

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.