Should Shareholders Reconsider Tri-Mode System (M) Berhad's (KLSE:TRIMODE) CEO Compensation Package?

Key Insights

• Tri-Mode System (M) Berhad's Annual General Meeting to take place on 20th of June
• Salary of RM516.0k is part of CEO Han Hew's total remuneration
• The total compensation is similar to the average for the industry
• Over the past three years, Tri-Mode System (M) Berhad's EPS fell by 21% and over the past three years, the total loss to shareholders 32%

Tri-Mode System (M) Berhad (KLSE:TRIMODE) has not performed well recently and CEO Han Hew will probably need to up their game. At the upcoming AGM on 20th of June, shareholders can hear from the board including their plans for turning around performance. 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. From our analysis, we think CEO compensation may need a review in light of the recent performance.

View our latest analysis for Tri-Mode System (M) Berhad

Comparing Tri-Mode System (M) Berhad's CEO Compensation With The Industry

At the time of writing, our data shows that Tri-Mode System (M) Berhad has a market capitalization of RM61m, and reported total annual CEO compensation of RM682k for the year to December 2023. That's a notable increase of 18% on last year. Notably, the salary which is RM516.0k, represents most of the total compensation being paid.

For comparison, other companies in the Malaysia Logistics industry with market capitalizations below RM942m, reported a median total CEO compensation of RM680k. So it looks like Tri-Mode System (M) Berhad compensates Han Hew in line with the median for the industry. Moreover, Han Hew also holds RM31m worth of Tri-Mode System (M) Berhad stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component	2023	2022	Proportion (2023)
Salary	RM516k	RM425k	76%
Other	RM166k	RM150k	24%
Total Compensation	RM682k	RM576k	100%

Speaking on an industry level, nearly 75% of total compensation represents salary, while the remainder of 25% is other remuneration. Although there is a difference in how total compensation is set, Tri-Mode System (M) Berhad more or less reflects the market in terms of setting the salary. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

A Look at Tri-Mode System (M) Berhad's Growth Numbers

Tri-Mode System (M) Berhad has reduced its earnings per share by 21% a year over the last three years. In the last year, its revenue is down 28%.

Few shareholders would be pleased to read that EPS have declined. 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. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Tri-Mode System (M) Berhad Been A Good Investment?

Few Tri-Mode System (M) Berhad shareholders would feel satisfied with the return of -32% over three years. So shareholders would probably want the company to be less generous with CEO compensation.

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, 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. That's why we did our research, and identified 3 warning signs for Tri-Mode System (M) Berhad (of which 1 doesn't sit too well with us!) that you should know about in order to have a holistic understanding of the stock.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.