Here's Why Shareholders May Want To Be Cautious With Increasing Batu Kawan Berhad's (KLSE:BKAWAN) CEO Pay Packet

By
Simply Wall St
Published
February 10, 2022
KLSE:BKAWAN
Source: Shutterstock

Under the guidance of CEO Hau-Hian Lee, Batu Kawan Berhad (KLSE:BKAWAN) has performed reasonably well recently. In light of this performance, CEO compensation will probably not be the main focus for shareholders as they go into the AGM on 17 February 2022. However, some shareholders may still want to keep CEO compensation within reason.

See our latest analysis for Batu Kawan Berhad

Comparing Batu Kawan Berhad's CEO Compensation With the industry

Our data indicates that Batu Kawan Berhad has a market capitalization of RM9.5b, and total annual CEO compensation was reported as RM9.6m for the year to September 2021. We note that's an increase of 41% above last year. While we always look at total compensation first, our analysis shows that the salary component is less, at RM3.3m.

For comparison, other companies in the same industry with market capitalizations ranging between RM4.2b and RM13b had a median total CEO compensation of RM2.1m. This suggests that Hau-Hian Lee is paid more than the median for the industry. Moreover, Hau-Hian Lee also holds RM38m worth of Batu Kawan Berhad stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component20212020Proportion (2021)
Salary RM3.3m RM2.9m 34%
Other RM6.3m RM3.9m 66%
Total CompensationRM9.6m RM6.8m100%

On an industry level, roughly 72% of total compensation represents salary and 28% is other remuneration. It's interesting to note that Batu Kawan Berhad 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.

ceo-compensation
KLSE:BKAWAN CEO Compensation February 10th 2022

Batu Kawan Berhad's Growth

Batu Kawan Berhad's earnings per share (EPS) grew 47% per year over the last three years. Its revenue is up 29% over the last year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. The combination of strong revenue growth with medium-term EPS improvement certainly points to the kind of growth we like to see. 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 Batu Kawan Berhad Been A Good Investment?

We think that the total shareholder return of 55%, over three years, would leave most Batu Kawan Berhad shareholders smiling. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.

In Summary...

The company's decent performance might have made most shareholders happy, possibly making CEO remuneration the least of the concerns to be discussed in the upcoming AGM. Still, not all shareholders might be in favor of a pay raise to the CEO, seeing that they are already being paid higher than the industry.

While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. We did our research and spotted 1 warning sign for Batu Kawan Berhad that investors should look into moving forward.

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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