Here's Why Shareholders Should Examine Scientex Packaging (Ayer Keroh) Berhad's (KLSE:SCIPACK) CEO Compensation Package More Closely

Key Insights

• Scientex Packaging (Ayer Keroh) Berhad to hold its Annual General Meeting on 13th of December
• Salary of RM576.0k is part of CEO Chee Chang's total remuneration
• The total compensation is similar to the average for the industry
• Over the past three years, Scientex Packaging (Ayer Keroh) Berhad's EPS fell by 11% and over the past three years, the total loss to shareholders 16%

Shareholders will probably not be too impressed with the underwhelming results at Scientex Packaging (Ayer Keroh) Berhad (KLSE:SCIPACK) recently. Shareholders can take the chance to hold the board and management accountable for the unsatisfactory performance at the next AGM on 13th of December. This will be also be a chance where they can challenge the board on company direction and vote on resolutions such as executive remuneration. The data we present below explains why we think CEO compensation is not consistent with recent performance.

View our latest analysis for Scientex Packaging (Ayer Keroh) Berhad

How Does Total Compensation For Chee Chang Compare With Other Companies In The Industry?

Our data indicates that Scientex Packaging (Ayer Keroh) Berhad has a market capitalization of RM743m, and total annual CEO compensation was reported as RM858k for the year to July 2023. That's a fairly small increase of 4.4% over the previous year. Notably, the salary which is RM576.0k, represents most of the total compensation being paid.

On examining similar-sized companies in the Malaysia Packaging industry with market capitalizations between RM467m and RM1.9b, we discovered that the median CEO total compensation of that group was RM756k. This suggests that Scientex Packaging (Ayer Keroh) Berhad remunerates its CEO largely in line with the industry average. Moreover, Chee Chang also holds RM329k worth of Scientex Packaging (Ayer Keroh) Berhad stock directly under their own name.

Component	2023	2022	Proportion (2023)
Salary	RM576k	RM516k	67%
Other	RM282k	RM306k	33%
Total Compensation	RM858k	RM822k	100%

Talking in terms of the industry, salary represented approximately 76% of total compensation out of all the companies we analyzed, while other remuneration made up 24% of the pie. In Scientex Packaging (Ayer Keroh) Berhad's case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

A Look at Scientex Packaging (Ayer Keroh) Berhad's Growth Numbers

Over the last three years, Scientex Packaging (Ayer Keroh) Berhad has shrunk its earnings per share by 11% per year. The trailing twelve months of revenue was pretty much the same as the prior period.

Overall this is not a very positive result for shareholders. And the flat revenue is seriously uninspiring. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. 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 Scientex Packaging (Ayer Keroh) Berhad Been A Good Investment?

Since shareholders would have lost about 16% over three years, some Scientex Packaging (Ayer Keroh) Berhad investors would surely be feeling negative emotions. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

In Summary...

Not only have shareholders not seen a favorable return on their investment, but the business hasn't performed well either. Few shareholders would be willing to award the CEO with a pay raise. At the upcoming AGM, management will get a chance to explain how they plan to get the business back on track and address the concerns from investors.

CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. We've identified 1 warning sign for Scientex Packaging (Ayer Keroh) Berhad that investors should be aware of in a dynamic business environment.

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.

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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.