We think shareholders may want to consider a review of Kim Hin Industry Berhad’s (KLSE:KIMHIN) CEO compensation

Key ideas

• Kim Hin Industry Berhad to hold its annual general meeting on May 30

• CEO John Chua’s total remuneration includes salary of RM1.02 million

• Overall salary is 267% higher than the industry average

• Over the past three years, Kim Hin Industry Berhad’s EPS fell 32%, and over the past three years, the total loss to shareholders was 40%.

The results at Kim Hin Industry Berhad (KLSE:KIMHIN) have been quite disappointing recently and CEO John Chua bears some responsibility for that. Shareholders will be interested in what the board has to say about improving performance at the upcoming annual general meeting on May 30. This would also be an opportunity for shareholders to influence management by voting on company resolutions such as executive compensation, which could have a significant impact on the company. Based on our analysis, we believe CEO compensation may need to be reviewed in light of recent performance.

View our latest analysis for Kim Hin Industry Berhad

How does John Chua’s total compensation compare to other companies in the industry?

At the time of writing, our data shows that Kim Hin Industry Berhad has a market capitalization of RM73 million and reported total annual CEO compensation of RM1.3 million for the year to December 2023. This is notably a decrease of 11% compared to the previous year. . Notably, the salary, which amounts to RM1.02 million, accounts for the majority of the total remuneration paid.

Comparing similar-sized companies in Malaysia’s construction sector with market capitalizations below RM942 million, we found that the median CEO total compensation was RM349,000. This suggests that John Chua is paid more than the industry median. Additionally, John Chua directly owns shares in the company worth RM273,000.

At the sector level, around 80% of total compensation represents salary and 20% is other remuneration. Kim Hin Industry Berhad largely reflects the industry average when it comes to the share of salary in total compensation. If salary is the major component of total compensation, this suggests that the CEO receives a fixed higher proportion of total compensation, regardless of performance.

A look at Kim Hin Industry Berhad’s growth figures

Kim Hin Industry Berhad has shrunk its earnings per share by 32% annually over the past three years. It saw its turnover fall by 8.8% over the last year.

Few shareholders would be happy to read that EPS has declined. This situation is compounded by the fact that revenues are actually lower than last year. It’s hard to argue that the company is operating at full capacity, so shareholders might be opposed to high CEO compensation. While we don’t have analyst forecasts for the company, shareholders may want to review this detailed historical chart of earnings, revenue and cash flow.

The story continues

Was Kim Hin Industry Berhad a good investment?

A return of -40% over three years would not have pleased the shareholders of Kim Hin Industry Berhad. This suggests that it would not be wise for the company to compensate the CEO too generously.

In summary…

Along with the company’s poor performance, shareholders have suffered from low price returns on their investments, suggesting there is little, if any, chance they will support a CEO pay increase. At the upcoming AGM, management will have the opportunity to explain how they plan to get the business back on track and address investor concerns.

CEO compensation is a crucial aspect to watch, but investors should also keep their eyes open to other issues related to company performance. We did our research and spotted Two warning signs for Kim Hin Industry Berhad that investors should consider moving forward.

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This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts only using unbiased methodology and our articles are not intended to constitute financial advice. It does not constitute a recommendation to buy or sell shares and does not take into account your objectives or your financial situation. Our goal is to provide you with targeted, long-term analysis based on fundamental data. Note that our analysis may not take into account the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.