We Think V.S. Industry Berhad's (KLSE:VS) CEO Compensation Package Needs To Be Put Under A Microscope

Key Insights

• V.S. Industry Berhad to hold its Annual General Meeting on 3rd of January
• CEO Sem Gan's total compensation includes salary of RM1.80m
• The overall pay is 282% above the industry average
• Over the past three years, V.S. Industry Berhad's EPS fell by 6.6% and over the past three years, the total loss to shareholders 12%

The results at V.S. Industry Berhad (KLSE:VS) have been quite disappointing recently and CEO Sem Gan bears some responsibility for this. Shareholders will be interested in what the board will have to say about turning performance around at the next AGM on 3rd of January. It would also be an opportunity for shareholders to influence management through voting on company resolutions such as executive remuneration, which could impact the firm significantly. We present the case why we think CEO compensation is out of sync with company performance.

Check out our latest analysis for V.S. Industry Berhad

Comparing V.S. Industry Berhad's CEO Compensation With The Industry

Our data indicates that V.S. Industry Berhad has a market capitalization of RM4.3b, and total annual CEO compensation was reported as RM2.2m for the year to July 2024. That's a notable decrease of 10% on last year. Notably, the salary which is RM1.80m, represents most of the total compensation being paid.

For comparison, other companies in the Malaysian Electronic industry with market capitalizations ranging between RM1.8b and RM7.2b had a median total CEO compensation of RM588k. Accordingly, our analysis reveals that V.S. Industry Berhad pays Sem Gan north of the industry median. Moreover, Sem Gan also holds RM213m worth of V.S. Industry Berhad stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component	2024	2023	Proportion (2024)
Salary	RM1.8m	RM1.8m	80%
Other	RM453k	RM708k	20%
Total Compensation	RM2.2m	RM2.5m	100%

Talking in terms of the industry, salary represented approximately 81% of total compensation out of all the companies we analyzed, while other remuneration made up 19% of the pie. V.S. Industry Berhad is largely mirroring the industry average when it comes to the share a salary enjoys in overall compensation. 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.

V.S. Industry Berhad's Growth

Over the last three years, V.S. Industry Berhad has shrunk its earnings per share by 6.6% per year. It saw its revenue drop 4.1% over the last year.

The decline in EPS is a bit concerning. This is compounded by the fact revenue is actually down on last year. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.

Has V.S. Industry Berhad Been A Good Investment?

With a three year total loss of 12% for the shareholders, V.S. Industry Berhad would certainly have some dissatisfied shareholders. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

In Summary...

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, management will get a chance to explain how they plan to get the business back on track and address the concerns from investors.

While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. That's why we did some digging and identified 1 warning sign for V.S. Industry Berhad that you should be aware of before investing.

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.