Should Shareholders Worry About PUC Berhad's (KLSE:PUC) CEO Compensation Package?

Performance at PUC Berhad (KLSE:PUC) has not been particularly rosy recently and shareholders will likely be holding CEO Chia Cheong and the board accountable for this. The next AGM coming up on 30 June 2021 will be a chance for shareholders to have their concerns addressed by the board, challenge management on company strategy and vote on resolutions such as executive remuneration, which may help change the company's future prospects. We think most shareholders will probably pass the CEO compensation, based on what we gathered.

View our latest analysis for PUC Berhad

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

Our data indicates that PUC Berhad has a market capitalization of RM172m, and total annual CEO compensation was reported as RM348k for the year to December 2020. We note that's a small decrease of 3.3% on last year. Notably, the salary of RM348k is the entirety of the CEO compensation.

In comparison with other companies in the industry with market capitalizations under RM832m, the reported median total CEO compensation was RM806k. This suggests that Chia Cheong is paid below the industry median. Moreover, Chia Cheong also holds RM8.7m worth of PUC 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	RM348k	RM360k	100%
Other	-	-	-
Total Compensation	RM348k	RM360k	100%

On an industry level, roughly 92% of total compensation represents salary and 8% is other remuneration. At the company level, PUC Berhad pays Chia Cheong solely through a salary, preferring to go down a conventional route. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

A Look at PUC Berhad's Growth Numbers

Over the last three years, PUC Berhad has shrunk its earnings per share by 40% per year. In the last year, its revenue is down 65%.

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 PUC Berhad Been A Good Investment?

With a total shareholder return of -83% over three years, PUC Berhad shareholders would by and large be disappointed. So shareholders would probably want the company to be less generous with CEO compensation.

To Conclude...

PUC Berhad pays CEO compensation exclusively through a salary, with non-salary compensation completely ignored. 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, the board will get the chance to explain the steps it plans to take to improve business performance.

CEO pay is simply one of the many factors that need to be considered while examining business performance. We identified 6 warning signs for PUC Berhad (3 shouldn't be ignored!) that you should be aware of before investing here.

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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