Increases to Starlight Culture Entertainment Group Limited's (HKG:1159) CEO Compensation Might Cool off for now

Key Insights

• Starlight Culture Entertainment Group will host its Annual General Meeting on 31st of May
• Total pay for CEO Lei Luo includes HK$3.27m salary
• The overall pay is 56% above the industry average
• Starlight Culture Entertainment Group's three-year loss to shareholders was 89% while its EPS grew by 29% over the past three years

In the past three years, the share price of Starlight Culture Entertainment Group Limited (HKG:1159) has struggled to grow and now shareholders are sitting on a loss. What is concerning is that despite positive EPS growth, the share price has not tracked the trend in fundamentals. The AGM coming up on the 31st of May could be an opportunity for shareholders to bring these concerns to the board's attention. 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 Starlight Culture Entertainment Group

Comparing Starlight Culture Entertainment Group Limited's CEO Compensation With The Industry

According to our data, Starlight Culture Entertainment Group Limited has a market capitalization of HK$185m, and paid its CEO total annual compensation worth HK$3.3m over the year to December 2023. We note that's an increase of 16% above last year. It is worth noting that the CEO compensation consists entirely of the salary, worth HK$3.3m.

On comparing similar-sized companies in the Hong Kong Trade Distributors industry with market capitalizations below HK$1.6b, we found that the median total CEO compensation was HK$2.1m. Hence, we can conclude that Lei Luo is remunerated higher than the industry median.

Component	2023	2022	Proportion (2023)
Salary	HK$3.3m	HK$2.8m	100%
Other	-	-	-
Total Compensation	HK$3.3m	HK$2.8m	100%

Talking in terms of the industry, salary represented approximately 94% of total compensation out of all the companies we analyzed, while other remuneration made up 6% of the pie. At the company level, Starlight Culture Entertainment Group pays Lei Luo solely through a salary, preferring to go down a conventional route. 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.

Starlight Culture Entertainment Group Limited's Growth

Starlight Culture Entertainment Group Limited's earnings per share (EPS) grew 29% per year over the last three years. In the last year, its revenue is up 33%.

Shareholders would be glad to know that the company has improved itself over the last few years. The combination of strong revenue growth with medium-term EPS improvement certainly points to the kind of growth we like to see. 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 Starlight Culture Entertainment Group Limited Been A Good Investment?

Few Starlight Culture Entertainment Group Limited shareholders would feel satisfied with the return of -89% over three years. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

Starlight Culture Entertainment Group rewards its CEO solely through a salary, ignoring non-salary benefits completely. Despite the growth in its earnings, the share price decline in the past three years is certainly concerning. 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. These concerns should be addressed at the upcoming AGM, where shareholders can question the board and evaluate if their judgement and decision making is still in line with their expectations.

CEO pay is simply one of the many factors that need to be considered while examining business performance. We identified 4 warning signs for Starlight Culture Entertainment Group (2 make us uncomfortable!) that you should be aware of before investing here.

Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies that have HIGH return on equity and low debt.

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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.