Shareholders May Be More Conservative With Hong Kong Finance Group Limited's (HKG:1273) CEO Compensation For Now

As many shareholders of Hong Kong Finance Group Limited (HKG:1273) will be aware, they have not made a gain on their investment in the past three years. 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 02 September 2021. 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 Hong Kong Finance Group

Comparing Hong Kong Finance Group Limited's CEO Compensation With the industry

Our data indicates that Hong Kong Finance Group Limited has a market capitalization of HK$212m, and total annual CEO compensation was reported as HK$1.7m for the year to March 2021. That's mostly flat as compared to the prior year's compensation. In particular, the salary of HK$1.36m, makes up a huge portion of the total compensation being paid to the CEO.

In comparison with other companies in the industry with market capitalizations under HK$1.6b, the reported median total CEO compensation was HK$549k. Hence, we can conclude that Dickson Tse is remunerated higher than the industry median.

Component	2021	2020	Proportion (2021)
Salary	HK$1.4m	HK$1.3m	79%
Other	HK$355k	HK$451k	21%
Total Compensation	HK$1.7m	HK$1.8m	100%

On an industry level, roughly 79% of total compensation represents salary and 21% is other remuneration. Our data reveals that Hong Kong Finance Group 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.

Hong Kong Finance Group Limited's Growth

Over the past three years, Hong Kong Finance Group Limited has seen its earnings per share (EPS) grow by 14% per year. It achieved revenue growth of 22% over the last year.

This demonstrates that the company has been improving recently and is good news for the shareholders. It's also good to see decent revenue growth in the last year, suggesting the business is healthy and growing. 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 Hong Kong Finance Group Limited Been A Good Investment?

Since shareholders would have lost about 8.8% over three years, some Hong Kong Finance Group Limited investors would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

Shareholders have not seen their shares grow in value, rather they have seen their shares decline. The fact that the stock price hasn't grown along with earnings may indicate that other issues may be affecting that stock. If there are some unknown variables that are influencing the stock's price, surely shareholders would have some concerns. 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 CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. We've identified 2 warning signs for Hong Kong Finance Group 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.
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