Shareholders May Find It Hard To Justify Increasing Genting Plantations Berhad's (KLSE:GENP) CEO Compensation For Now

Key Insights

• Genting Plantations Berhad will host its Annual General Meeting on 11th of June
• Salary of RM1.14m is part of CEO Kong Tan's total remuneration
• The total compensation is similar to the average for the industry
• Genting Plantations Berhad's EPS grew by 4.3% over the past three years while total shareholder loss over the past three years was 14%

In the past three years, shareholders of Genting Plantations Berhad (KLSE:GENP) have seen a loss on their investment. However, what is unusual is that EPS growth has been positive, suggesting that the share price has diverged from fundamentals. These are some of the concerns that shareholders may want to bring up at the next AGM held on 11th of June. They could also influence management through voting on resolutions such as executive remuneration. We discuss below why we think shareholders should be cautious of approving a raise for the CEO at the moment.

View our latest analysis for Genting Plantations Berhad

How Does Total Compensation For Kong Tan Compare With Other Companies In The Industry?

Our data indicates that Genting Plantations Berhad has a market capitalization of RM5.4b, and total annual CEO compensation was reported as RM1.9m for the year to December 2023. That's a notable decrease of 13% on last year. Notably, the salary which is RM1.14m, represents most of the total compensation being paid.

For comparison, other companies in the Malaysian Food industry with market capitalizations ranging between RM1.9b and RM7.5b had a median total CEO compensation of RM1.8m. From this we gather that Kong Tan is paid around the median for CEOs in the industry. What's more, Kong Tan holds RM1.6m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component	2023	2022	Proportion (2023)
Salary	RM1.1m	RM1.1m	61%
Other	RM741k	RM1.1m	39%
Total Compensation	RM1.9m	RM2.1m	100%

Speaking on an industry level, nearly 66% of total compensation represents salary, while the remainder of 34% is other remuneration. Genting Plantations Berhad is largely mirroring the industry average when it comes to the share a salary enjoys in overall compensation. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

Genting Plantations Berhad's Growth

Genting Plantations Berhad's earnings per share (EPS) grew 4.3% per year over the last three years. Its revenue is down 7.9% over the previous year.

We would argue that the lack of revenue growth in the last year is less than ideal, but it is good to see a modest EPS growth at least. It's hard to reach a conclusion about business performance right now. This may be one to watch. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.

Has Genting Plantations Berhad Been A Good Investment?

With a three year total loss of 14% for the shareholders, Genting Plantations Berhad would certainly have some dissatisfied shareholders. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

The fact that shareholders are sitting on a loss on the value of their shares in the past few years is certainly disconcerting. A huge lag in share price growth when earnings have grown may indicate there could be other issues that are affecting the company at the moment that the market is focused on. Shareholders would be keen to know what's holding the stock back when earnings have grown. The upcoming AGM will be a chance for shareholders to question the board on key matters, such as CEO remuneration or any other issues they might have and revisit their investment thesis with regards to the company.

CEO compensation can have a massive impact on performance, but it's just one element. We did our research and spotted 1 warning sign for Genting Plantations Berhad that investors should look into moving forward.

Important note: Genting Plantations 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.