We Think LB Aluminium Berhad's (KLSE:LBALUM) CEO Compensation Looks Fair

We have been pretty impressed with the performance at LB Aluminium Berhad (KLSE:LBALUM) recently and CEO Mark Wing deserves a mention for their role in it. Shareholders will have this at the front of their minds in the upcoming AGM on 28 October 2021. It is likely that the focus will be on company strategy going forward as shareholders hear from the board and cast their votes on resolutions such as executive remuneration and other matters. Here is our take on why we think CEO compensation is not extravagant.

See our latest analysis for LB Aluminium Berhad

Comparing LB Aluminium Berhad's CEO Compensation With the industry

At the time of writing, our data shows that LB Aluminium Berhad has a market capitalization of RM257m, and reported total annual CEO compensation of RM783k for the year to April 2021. That's a fairly small increase of 5.0% over the previous year. In particular, the salary of RM601.0k, makes up a huge portion of the total compensation being paid to the CEO.

On comparing similar-sized companies in the industry with market capitalizations below RM832m, we found that the median total CEO compensation was RM742k. This suggests that LB Aluminium Berhad remunerates its CEO largely in line with the industry average. Furthermore, Mark Wing directly owns RM3.8m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2021	2020	Proportion (2021)
Salary	RM601k	RM567k	77%
Other	RM182k	RM179k	23%
Total Compensation	RM783k	RM746k	100%

Talking in terms of the industry, salary represented approximately 77% of total compensation out of all the companies we analyzed, while other remuneration made up 23% of the pie. Although there is a difference in how total compensation is set, LB Aluminium Berhad more or less reflects the market in terms of setting the salary. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

LB Aluminium Berhad's Growth

LB Aluminium Berhad has seen its earnings per share (EPS) increase by 98% a year over the past three years. It achieved revenue growth of 19% over the last year.

Shareholders would be glad to know that the company has improved itself over the last few years. This sort of respectable year-on-year revenue growth is often seen at a healthy, growing business. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has LB Aluminium Berhad Been A Good Investment?

Most shareholders would probably be pleased with LB Aluminium Berhad for providing a total return of 141% over three years. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

To Conclude...

The company's solid performance might have made most shareholders happy, possibly making CEO remuneration the least of the matters to be discussed in the AGM. However, investors will get the chance to engage on key strategic initiatives and future growth opportunities for the company and set their longer-term expectations.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. In our study, we found 3 warning signs for LB Aluminium Berhad you should be aware of, and 1 of them is potentially serious.

Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.

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.

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