Shareholders Will Probably Hold Off On Increasing Press Metal Aluminium Holdings Berhad's (KLSE:PMETAL) CEO Compensation For The Time Being

Press Metal Aluminium Holdings Berhad (KLSE:PMETAL) has exhibited strong share price growth in the past few years. However, its earnings growth has not kept up, suggesting that there may be something amiss. These concerns will be at the front of shareholders' minds as they go into the AGM coming up on 29 June 2021. One way that shareholders can influence managerial decisions is through voting on CEO and executive remuneration packages, which studies show could impact company performance. From the data that we gathered, we think that shareholders should hold off on a raise on CEO compensation until performance starts to show some improvement.

Check out our latest analysis for Press Metal Aluminium Holdings Berhad

How Does Total Compensation For Poh Koon Compare With Other Companies In The Industry?

According to our data, Press Metal Aluminium Holdings Berhad has a market capitalization of RM38b, and paid its CEO total annual compensation worth RM2.4m over the year to December 2020. That is, the compensation was roughly the same as last year. In particular, the salary of RM1.87m, makes up a huge portion of the total compensation being paid to the CEO.

For comparison, other companies in the same industry with market capitalizations ranging between RM17b and RM50b had a median total CEO compensation of RM604k. Accordingly, our analysis reveals that Press Metal Aluminium Holdings Berhad pays Poh Koon north of the industry median. Moreover, Poh Koon also holds RM6.3b worth of Press Metal Aluminium Holdings Berhad stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component	2020	2019	Proportion (2020)
Salary	RM1.9m	RM1.8m	77%
Other	RM544k	RM529k	23%
Total Compensation	RM2.4m	RM2.4m	100%

On an industry level, roughly 78% of total compensation represents salary and 22% is other remuneration. Press Metal Aluminium Holdings Berhad is largely mirroring the industry average when it comes to the share a salary enjoys in overall compensation. 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 Press Metal Aluminium Holdings Berhad's Growth Numbers

Over the last three years, Press Metal Aluminium Holdings Berhad has shrunk its earnings per share by 4.2% per year. In the last year, its revenue is down 7.7%.

The decline in EPS is a bit concerning. And the fact that revenue is down year on year arguably paints an ugly picture. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.

Has Press Metal Aluminium Holdings Berhad Been A Good Investment?

We think that the total shareholder return of 131%, over three years, would leave most Press Metal Aluminium Holdings Berhad shareholders smiling. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.

To Conclude...

While the return to shareholders does look promising, it's hard to ignore the lack of earnings growth and this makes us question whether these strong returns will continue. The upcoming AGM will provide shareholders the opportunity to revisit the company’s remuneration policies and evaluate if the board’s judgement and decision-making is aligned with that of the company’s shareholders.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. We've identified 1 warning sign for Press Metal Aluminium Holdings Berhad that investors should be aware of in a dynamic business environment.

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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This article by Simply Wall St is general in nature. 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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