It's Probably Less Likely That Nestlé (Malaysia) Berhad's (KLSE:NESTLE) CEO Will See A Huge Pay Rise This Year

Key Insights

• Nestlé (Malaysia) Berhad to hold its Annual General Meeting on 30th of April
• CEO Juan Jose Campillo's total compensation includes salary of RM1.49m
• The overall pay is comparable to the industry average
• Over the past three years, Nestlé (Malaysia) Berhad's EPS grew by 6.1% and over the past three years, the total loss to shareholders 1.4%

In the past three years, the share price of Nestlé (Malaysia) Berhad (KLSE:NESTLE) has struggled to generate growth for its shareholders. Despite positive EPS growth in the past few years, the share price hasn't tracked the fundamental performance of the company. These are some of the concerns that shareholders may want to bring up at the next AGM held on 30th of April. They could also influence management through voting on resolutions such as executive remuneration. We think shareholders might be reluctant to increase compensation for the CEO at the moment, according to our analysis below.

See our latest analysis for Nestlé (Malaysia) Berhad

How Does Total Compensation For Juan Jose Campillo Compare With Other Companies In The Industry?

At the time of writing, our data shows that Nestlé (Malaysia) Berhad has a market capitalization of RM30b, and reported total annual CEO compensation of RM5.0m for the year to December 2023. We note that's a decrease of 8.7% compared to last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at RM1.5m.

On comparing similar companies from the Malaysian Food industry with market caps ranging from RM19b to RM57b, we found that the median CEO total compensation was RM4.5m. This suggests that Nestlé (Malaysia) Berhad remunerates its CEO largely in line with the industry average.

Component	2023	2022	Proportion (2023)
Salary	RM1.5m	RM1.4m	30%
Other	RM3.5m	RM4.1m	70%
Total Compensation	RM5.0m	RM5.5m	100%

Talking in terms of the industry, salary represented approximately 68% of total compensation out of all the companies we analyzed, while other remuneration made up 32% of the pie. It's interesting to note that Nestlé (Malaysia) Berhad allocates a smaller portion of compensation to salary in comparison to the broader industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

A Look at Nestlé (Malaysia) Berhad's Growth Numbers

Over the past three years, Nestlé (Malaysia) Berhad has seen its earnings per share (EPS) grow by 6.1% per year. In the last year, its revenue is up 5.8%.

We would argue that the improvement in revenue is good, but isn't particularly impressive, but the modest improvement in EPS is good. So there are some positives here, but not enough to earn high praise. 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 Nestlé (Malaysia) Berhad Been A Good Investment?

With a three year total loss of 1.4% for the shareholders, Nestlé (Malaysia) Berhad would certainly have some dissatisfied shareholders. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

Despite the growth in its earnings, the share price decline in the past three years is certainly concerning. The stock's movement is disjointed with the company's earnings growth, which ideally should move in the same direction. If there are some unknown variables that are influencing the stock's price, surely shareholders would have some concerns. These concerns should be addressed at the upcoming AGM, where shareholders can question the board and evaluate if their judgement and decision making is still in line with their expectations.

CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. That's why we did some digging and identified 2 warning signs for Nestlé (Malaysia) Berhad that investors should think about before committing capital to this stock.

Important note: Nestlé (Malaysia) 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.