Shareholders May Find It Hard To Justify Increasing Veson Holdings Limited's (HKG:1399) CEO Compensation For Now

Key Insights

• Veson Holdings' Annual General Meeting to take place on 30th of May
• Salary of CN¥664.0k is part of CEO Xiu Qin Lian's total remuneration
• The overall pay is comparable to the industry average
• Over the past three years, Veson Holdings' EPS grew by 51% and over the past three years, the total loss to shareholders 17%

The underwhelming share price performance of Veson Holdings Limited (HKG:1399) in the past three years would have disappointed many shareholders. 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 30th 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 think shareholders might be reluctant to increase compensation for the CEO at the moment, according to our analysis below.

See our latest analysis for Veson Holdings

Comparing Veson Holdings Limited's CEO Compensation With The Industry

At the time of writing, our data shows that Veson Holdings Limited has a market capitalization of HK$241m, and reported total annual CEO compensation of CN¥894k for the year to December 2023. We note that's a small decrease of 6.3% on last year. We note that the salary portion, which stands at CN¥664.0k constitutes the majority of total compensation received by the CEO.

In comparison with other companies in the Hong Kong Electrical industry with market capitalizations under HK$1.6b, the reported median total CEO compensation was CN¥1.0m. This suggests that Veson Holdings remunerates its CEO largely in line with the industry average.

Component	2023	2022	Proportion (2023)
Salary	CN¥664k	CN¥744k	74%
Other	CN¥230k	CN¥210k	26%
Total Compensation	CN¥894k	CN¥954k	100%

On an industry level, around 78% of total compensation represents salary and 22% is other remuneration. Although there is a difference in how total compensation is set, Veson Holdings more or less reflects the market in terms of setting the salary. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

Veson Holdings Limited's Growth

Veson Holdings Limited has seen its earnings per share (EPS) increase by 51% a year over the past three years. In the last year, its revenue is down 3.4%.

Shareholders would be glad to know that the company has improved itself over the last few years. While it would be good to see revenue growth, profits matter more in the end. 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 Veson Holdings Limited Been A Good Investment?

Given the total shareholder loss of 17% over three years, many shareholders in Veson Holdings Limited are probably rather dissatisfied, to say the least. So shareholders would probably want the company to be less generous with CEO compensation.

In Summary...

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. 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.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. In our study, we found 2 warning signs for Veson Holdings you should be aware of, and 1 of them makes us a bit uncomfortable.

Switching gears from Veson Holdings, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.

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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.