How Should Investors Feel About Asian Pac Holdings Berhad's (KLSE:ASIAPAC) CEO Remuneration?

This article will reflect on the compensation paid to Mustapha Bin Buang who has served as CEO of Asian Pac Holdings Berhad (KLSE:ASIAPAC) since 2001. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.

See our latest analysis for Asian Pac Holdings Berhad

Comparing Asian Pac Holdings Berhad's CEO Compensation With the industry

At the time of writing, our data shows that Asian Pac Holdings Berhad has a market capitalization of RM151m, and reported total annual CEO compensation of RM1.9m for the year to March 2020. That is, the compensation was roughly the same as last year. In particular, the salary of RM1.72m, makes up a huge portion of the total compensation being paid to the CEO.

For comparison, other companies in the industry with market capitalizations below RM808m, reported a median total CEO compensation of RM803k. Accordingly, our analysis reveals that Asian Pac Holdings Berhad pays Mustapha Bin Buang north of the industry median. What's more, Mustapha Bin Buang holds RM4.9m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Speaking on an industry level, nearly 83% of total compensation represents salary, while the remainder of 17% is other remuneration. Our data reveals that Asian Pac Holdings Berhad allocates salary more or less in line with the wider market. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.

Asian Pac Holdings Berhad's Growth

Asian Pac Holdings Berhad's earnings per share (EPS) grew 31% per year over the last three years. It saw its revenue drop 21% over the last year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. While it would be good to see revenue growth, profits matter more in the end. We don't have analyst forecasts, but you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.

Has Asian Pac Holdings Berhad Been A Good Investment?

Since shareholders would have lost about 12% over three years, some Asian Pac Holdings Berhad investors would surely be feeling negative emotions. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

To Conclude...

As we touched on above, Asian Pac Holdings Berhad is currently paying its CEO higher than the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. However, the EPS growth is certainly impressive, but it's disappointing to see negative shareholder returns over the same period. Although we don't think the CEO pay is too high, considering negative investor returns, it is more generous than modest.

CEO pay is simply one of the many factors that need to be considered while examining business performance. We did our research and identified 5 warning signs (and 2 which don't sit too well with us) in Asian Pac Holdings Berhad we think you should know about.

Important note: Asian Pac 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.

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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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