Here's Why Shareholders Should Examine Kim Hin Joo (Malaysia) Berhad's (KLSE:KHJB) CEO Compensation Package More Closely

Key Insights

• Kim Hin Joo (Malaysia) Berhad's Annual General Meeting to take place on 30th of May
• Total pay for CEO Fu Wei Pang includes RM318.0k salary
• The total compensation is 67% higher than the average for the industry
• Kim Hin Joo (Malaysia) Berhad's three-year loss to shareholders was 33% while its EPS was down 37% over the past three years

The results at Kim Hin Joo (Malaysia) Berhad (KLSE:KHJB) have been quite disappointing recently and CEO Fu Wei Pang bears some responsibility for this. Shareholders can take the chance to hold the board and management accountable for the unsatisfactory performance at the next AGM on 30th of May. This will be also be a chance where they can challenge the board on company direction and vote on resolutions such as executive remuneration. We present the case why we think CEO compensation is out of sync with company performance.

Check out our latest analysis for Kim Hin Joo (Malaysia) Berhad

How Does Total Compensation For Fu Wei Pang Compare With Other Companies In The Industry?

At the time of writing, our data shows that Kim Hin Joo (Malaysia) Berhad has a market capitalization of RM61m, and reported total annual CEO compensation of RM350k for the year to December 2023. That is, the compensation was roughly the same as last year. In particular, the salary of RM318.0k, makes up a huge portion of the total compensation being paid to the CEO.

On comparing similar-sized companies in the Malaysian Specialty Retail industry with market capitalizations below RM942m, we found that the median total CEO compensation was RM209k. Hence, we can conclude that Fu Wei Pang is remunerated higher than the industry median.

Component	2023	2022	Proportion (2023)
Salary	RM318k	RM325k	91%
Other	RM32k	RM32k	9%
Total Compensation	RM350k	RM357k	100%

On an industry level, around 74% of total compensation represents salary and 26% is other remuneration. Kim Hin Joo (Malaysia) Berhad is paying a higher share of its remuneration through a salary in comparison to the overall industry. 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 Kim Hin Joo (Malaysia) Berhad's Growth Numbers

Over the last three years, Kim Hin Joo (Malaysia) Berhad has shrunk its earnings per share by 37% per year. It saw its revenue drop 8.4% over the last year.

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 Kim Hin Joo (Malaysia) Berhad Been A Good Investment?

With a total shareholder return of -33% over three years, Kim Hin Joo (Malaysia) Berhad shareholders would by and large be disappointed. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

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, they can question the management's plans and strategies to turn performance around and reassess their investment thesis in regards to the company.

CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. We identified 2 warning signs for Kim Hin Joo (Malaysia) Berhad (1 shouldn't be ignored!) that you should be aware of before investing here.

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.