Here's Why Shareholders May Want To Be Cautious With Increasing MHC Plantations Bhd.'s (KLSE:MHC) CEO Pay Packet

Key Insights

• MHC Plantations Bhd will host its Annual General Meeting on 23rd of May
• Total pay for CEO King Thian Mah includes RM240.0k salary
• The total compensation is 38% higher than the average for the industry
• MHC Plantations Bhd's EPS declined by 12% over the past three years while total shareholder return over the past three years was 1.5%

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The share price of MHC Plantations Bhd. (KLSE:MHC) has struggled to grow by much over the last few years and probably has to do with the fact that earnings growth has gone backwards. Some of these issues will occupy shareholders' minds as the AGM rolls around on 23rd of May. They will be able to influence managerial decisions through the exercise of their voting power on resolutions, such as CEO remuneration and other matters, which may influence future company prospects. From the data that we gathered, we think that shareholders should hold off on a raise on CEO compensation until performance starts to show some improvement.

Check out our latest analysis for MHC Plantations Bhd

Comparing MHC Plantations Bhd.'s CEO Compensation With The Industry

Our data indicates that MHC Plantations Bhd. has a market capitalization of RM190m, and total annual CEO compensation was reported as RM515k for the year to December 2024. Notably, that's an increase of 31% over the year before. While we always look at total compensation first, our analysis shows that the salary component is less, at RM240k.

In comparison with other companies in the Malaysian Food industry with market capitalizations under RM859m, the reported median total CEO compensation was RM375k. Hence, we can conclude that King Thian Mah is remunerated higher than the industry median.

Component	2024	2023	Proportion (2024)
Salary	RM240k	RM240k	47%
Other	RM275k	RM154k	53%
Total Compensation	RM515k	RM394k	100%

On an industry level, around 64% of total compensation represents salary and 36% is other remuneration. It's interesting to note that MHC Plantations Bhd allocates a smaller portion of compensation to salary in comparison to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

MHC Plantations Bhd.'s Growth

Over the last three years, MHC Plantations Bhd. has shrunk its earnings per share by 12% per year. Its revenue is up 5.5% over the last year.

Overall this is not a very positive result for shareholders. And the modest revenue growth over 12 months isn't much comfort against the reduced EPS. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. While we don't have analyst forecasts for the company, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.

Has MHC Plantations Bhd. Been A Good Investment?

MHC Plantations Bhd. has not done too badly by shareholders, with a total return of 1.5%, over three years. It would be nice to see that metric improve in the future. As a result, investors in the company might be reluctant about agreeing to increase CEO pay in the future, before seeing an improvement on their returns.

In Summary...

The lacklustre share price returns along with the lack of earnings growth makes us think that a strong rebound in the share price may be difficult. 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 MHC Plantations Bhd that investors should be aware of in a dynamic business environment.

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.