Here's Why Shareholders May Want To Be Cautious With Increasing Eco World International Berhad's (KLSE:EWINT) CEO Pay Packet

Key Insights

• Eco World International Berhad will host its Annual General Meeting on 25th of March
• Salary of RM1.71m is part of CEO Leong Teow's total remuneration
• The overall pay is 100% above the industry average
• Eco World International Berhad's total shareholder return over the past three years was 47% while its EPS was down 87% over the past three years

Despite strong share price growth of 47% for Eco World International Berhad (KLSE:EWINT) over the last few years, earnings growth has been disappointing, which suggests something is amiss. These concerns will be at the front of shareholders' minds as they go into the AGM coming up on 25th of March. 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.

See our latest analysis for Eco World International Berhad

Comparing Eco World International Berhad's CEO Compensation With The Industry

Our data indicates that Eco World International Berhad has a market capitalization of RM828m, and total annual CEO compensation was reported as RM1.8m for the year to October 2023. That's mostly flat as compared to the prior year's compensation. We note that the salary portion, which stands at RM1.71m constitutes the majority of total compensation received by the CEO.

On comparing similar companies from the Malaysian Real Estate industry with market caps ranging from RM472m to RM1.9b, we found that the median CEO total compensation was RM885k. Hence, we can conclude that Leong Teow is remunerated higher than the industry median. What's more, Leong Teow holds RM5.3m 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	RM1.7m	RM1.7m	97%
Other	RM54k	RM28k	3%
Total Compensation	RM1.8m	RM1.7m	100%

Speaking on an industry level, nearly 74% of total compensation represents salary, while the remainder of 26% is other remuneration. Eco World International Berhad pays a high salary, concentrating more on this aspect of compensation in comparison to non-salary pay. 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 Eco World International Berhad's Growth Numbers

Over the last three years, Eco World International Berhad has shrunk its earnings per share by 87% per year. In the last year, its revenue is down 34%.

Overall this is not a very positive result for shareholders. This is compounded by the fact revenue is actually down on last year. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.

Has Eco World International Berhad Been A Good Investment?

Most shareholders would probably be pleased with Eco World International Berhad for providing a total return of 47% over three years. 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...

Eco World International Berhad pays its CEO a majority of compensation through a salary. Despite the strong returns on shareholders' investments, the fact that earnings have failed to grow makes us skeptical about the stock keeping up its current momentum. 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.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. We identified 2 warning signs for Eco World International Berhad (1 doesn't sit too well with us!) 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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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.