Here's Why Shareholders May Want To Be Cautious With Increasing Nova Wellness Group Berhad's (KLSE:NOVA) CEO Pay Packet

editorial-team@simplywallst.com (Simply Wall St)

Sun, Oct 29, 2023, 11:08 PM 4 min read

Key Insights

Nova Wellness Group Berhad to hold its Annual General Meeting on 6th of November
Salary of RM528.0k is part of CEO Nyie Phang's total remuneration
Total compensation is similar to the industry average
Nova Wellness Group Berhad's three-year loss to shareholders was 6.9% while its EPS grew by 4.7% over the past three years

In the past three years, shareholders of Nova Wellness Group Berhad (KLSE:NOVA) have seen a loss on their investment. However, what is unusual is that EPS growth has been positive, suggesting that the share price has diverged from fundamentals. Shareholders may want to question the board on the future direction of the company at the upcoming AGM on 6th of November. They could also try to influence management and firm direction through voting on resolutions such as executive remuneration and other company matters. We discuss below why we think shareholders should be cautious of approving a raise for the CEO at the moment.

Check out our latest analysis for Nova Wellness Group Berhad

How Does Total Compensation For Nyie Phang Compare With Other Companies In The Industry?

According to our data, Nova Wellness Group Berhad has a market capitalization of RM233m, and paid its CEO total annual compensation worth RM639k over the year to June 2023. That's mostly flat as compared to the prior year's compensation. Notably, the salary which is RM528.0k, represents most of the total compensation being paid.

In comparison with other companies in the Malaysia Personal Products industry with market capitalizations under RM956m, the reported median total CEO compensation was RM639k. From this we gather that Nyie Phang is paid around the median for CEOs in the industry. Moreover, Nyie Phang also holds RM135m worth of Nova Wellness Group 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	RM528k	RM498k	83%
Other	RM111k	RM139k	17%
Total Compensation	RM639k	RM637k	100%

On an industry level, around 82% of total compensation represents salary and 18% is other remuneration. Our data reveals that Nova Wellness Group Berhad allocates salary more or less in line with the wider market. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

ceo-compensation — KLSE:NOVA CEO Compensation October 30th 2023

Nova Wellness Group Berhad's Growth

Over the past three years, Nova Wellness Group Berhad has seen its earnings per share (EPS) grow by 4.7% per year. In the last year, its revenue is down 7.3%.

We would argue that the lack of revenue growth in the last year is less than ideal, but the modest improvement in EPS is good. It's hard to reach a conclusion about business performance right now. This may be one to watch. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.

Has Nova Wellness Group Berhad Been A Good Investment?

Since shareholders would have lost about 6.9% over three years, some Nova Wellness Group Berhad investors would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

Shareholders have not seen their shares grow in value, rather they have seen their shares decline. A huge lag in share price growth when earnings have grown may indicate there could be other issues that are affecting the company at the moment that the market is focused on. Shareholders would be keen to know what's holding the stock back when earnings have grown. At the upcoming AGM, shareholders will get the opportunity to discuss any issues with the board, including those related to CEO remuneration and assess if the board's plan will likely improve performance in the future.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. We've identified 2 warning signs for Nova Wellness Group Berhad that investors should be aware of in a dynamic business environment.

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.