Here's Why Shareholders May Want To Be Cautious With Increasing Malaysia Steel Works (KL) Bhd.'s (KLSE:MASTEEL) CEO Pay Packet

Key Insights

• Malaysia Steel Works (KL) Bhd's Annual General Meeting to take place on 19th of June
• Salary of RM1.28m is part of CEO Hean Tai's total remuneration
• The total compensation is 53% higher than the average for the industry
• Malaysia Steel Works (KL) Bhd's three-year loss to shareholders was 37% while its EPS was down 51% over the past three years

Shareholders of Malaysia Steel Works (KL) Bhd. (KLSE:MASTEEL) will have been dismayed by the negative share price return over the last three years. Per share earnings growth is also lacking, despite revenue growth. In light of this performance, shareholders will have a chance to question the board in the upcoming AGM on 19th of June, where they can impact on future company performance by voting on resolutions, including executive compensation. Here's our take on why we think shareholders might be hesitant about approving a raise at the moment.

See our latest analysis for Malaysia Steel Works (KL) Bhd

How Does Total Compensation For Hean Tai Compare With Other Companies In The Industry?

At the time of writing, our data shows that Malaysia Steel Works (KL) Bhd. has a market capitalization of RM240m, and reported total annual CEO compensation of RM1.4m for the year to December 2023. We note that's an increase of 11% above last year. We note that the salary portion, which stands at RM1.28m constitutes the majority of total compensation received by the CEO.

In comparison with other companies in the Malaysian Metals and Mining industry with market capitalizations under RM943m, the reported median total CEO compensation was RM934k. This suggests that Hean Tai is paid more than the median for the industry. Furthermore, Hean Tai directly owns RM492k worth of shares in the company.

Component	2023	2022	Proportion (2023)
Salary	RM1.3m	RM1.2m	89%
Other	RM151k	RM50k	11%
Total Compensation	RM1.4m	RM1.3m	100%

Talking in terms of the industry, salary represented approximately 69% of total compensation out of all the companies we analyzed, while other remuneration made up 31% of the pie. It's interesting to note that Malaysia Steel Works (KL) Bhd pays out a greater portion of remuneration through salary, compared to the industry. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

A Look at Malaysia Steel Works (KL) Bhd.'s Growth Numbers

Over the last three years, Malaysia Steel Works (KL) Bhd. has shrunk its earnings per share by 51% per year. Its revenue is up 23% over the last year.

The reduction in EPS, over three years, is arguably concerning. But in contrast the revenue growth is strong, suggesting future potential for EPS growth. In conclusion we can't form a strong opinion about business performance yet; but it's one worth watching. 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 Malaysia Steel Works (KL) Bhd. Been A Good Investment?

With a total shareholder return of -37% over three years, Malaysia Steel Works (KL) Bhd. shareholders would by and large be disappointed. So shareholders would probably want the company to be less generous with CEO compensation.

To Conclude...

The loss to shareholders over the past three years is certainly concerning and possibly has something to do with the fact that the company's earnings haven't grown. Shareholders will get the chance at the upcoming AGM 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 is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. That's why we did our research, and identified 3 warning signs for Malaysia Steel Works (KL) Bhd (of which 1 shouldn't be ignored!) that you should know about in order to have a holistic understanding of the stock.

Important note: Malaysia Steel Works (KL) Bhd 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.