We Think Muda Holdings Berhad's (KLSE:MUDA) CEO Compensation Package Needs To Be Put Under A Microscope

Key Insights

• Muda Holdings Berhad to hold its Annual General Meeting on 27th of June
• Salary of RM1.46m is part of CEO Chiun Cheong Lim's total remuneration
• The total compensation is 695% higher than the average for the industry
• Over the past three years, Muda Holdings Berhad's EPS fell by 110% and over the past three years, the total loss to shareholders 43%

Muda Holdings Berhad (KLSE:MUDA) has not performed well recently and CEO Chiun Cheong Lim will probably need to up their game. At the upcoming AGM on 27th of June, shareholders can hear from the board including their plans for turning around performance. It would also be an opportunity for shareholders to influence management through voting on company resolutions such as executive remuneration, which could impact the firm significantly. From our analysis, we think CEO compensation may need a review in light of the recent performance.

See our latest analysis for Muda Holdings Berhad

How Does Total Compensation For Chiun Cheong Lim Compare With Other Companies In The Industry?

According to our data, Muda Holdings Berhad has a market capitalization of RM445m, and paid its CEO total annual compensation worth RM2.1m over the year to December 2023. That's a modest increase of 3.0% on the prior year. We note that the salary portion, which stands at RM1.46m constitutes the majority of total compensation received by the CEO.

On comparing similar-sized companies in the Malaysia Packaging industry with market capitalizations below RM942m, we found that the median total CEO compensation was RM267k. Hence, we can conclude that Chiun Cheong Lim is remunerated higher than the industry median. What's more, Chiun Cheong Lim holds RM1.0m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component	2023	2022	Proportion (2023)
Salary	RM1.5m	RM1.4m	69%
Other	RM662k	RM684k	31%
Total Compensation	RM2.1m	RM2.1m	100%

On an industry level, around 68% of total compensation represents salary and 32% is other remuneration. Although there is a difference in how total compensation is set, Muda Holdings Berhad more or less reflects the market in terms of setting the salary. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

Muda Holdings Berhad's Growth

Muda Holdings Berhad has reduced its earnings per share by 110% a year over the last three years. In the last year, its revenue is down 12%.

Few shareholders would be pleased to read that EPS have declined. And the impression is worse when you consider revenue is down year-on-year. So given this relatively weak performance, shareholders would probably not want to see high compensation 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 Muda Holdings Berhad Been A Good Investment?

With a total shareholder return of -43% over three years, Muda Holdings Berhad shareholders would by and large be disappointed. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

Given that shareholders haven't seen any positive returns on their investment, not to mention the lack of earnings growth, this may suggest that few of them would be willing to award the CEO with a pay rise. At the upcoming AGM, they can question the management's plans and strategies to turn performance around and reassess their investment thesis in regards to the company.

CEO pay is simply one of the many factors that need to be considered while examining business performance. That's why we did our research, and identified 4 warning signs for Muda Holdings Berhad (of which 2 shouldn't be ignored!) that you should know about in order to have a holistic understanding of the stock.

Important note: Muda Holdings 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com