Shareholders May Not Be So Generous With AP Rentals Holdings Limited's (HKG:1496) CEO Compensation And Here's Why

Key Insights

• AP Rentals Holdings to hold its Annual General Meeting on 28th of August
• Salary of HK$3.16m is part of CEO Pong Sing Lau's total remuneration
• Total compensation is 44% above industry average
• Over the past three years, AP Rentals Holdings' EPS grew by 99% and over the past three years, the total loss to shareholders 36%

In the past three years, the share price of AP Rentals Holdings Limited (HKG:1496) 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. Shareholders may want to question the board on the future direction of the company at the upcoming AGM on 28th of August. 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 AP Rentals Holdings

Comparing AP Rentals Holdings Limited's CEO Compensation With The Industry

According to our data, AP Rentals Holdings Limited has a market capitalization of HK$84m, and paid its CEO total annual compensation worth HK$3.2m over the year to March 2024. We note that's a small decrease of 3.6% on last year. In particular, the salary of HK$3.16m, makes up a huge portion of the total compensation being paid to the CEO.

In comparison with other companies in the Hong Kong Trade Distributors industry with market capitalizations under HK$1.6b, the reported median total CEO compensation was HK$2.2m. Accordingly, our analysis reveals that AP Rentals Holdings Limited pays Pong Sing Lau north of the industry median. Moreover, Pong Sing Lau also holds HK$35m worth of AP Rentals Holdings stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component	2024	2023	Proportion (2024)
Salary	HK$3.2m	HK$3.3m	99%
Other	HK$18k	HK$18k	1%
Total Compensation	HK$3.2m	HK$3.3m	100%

On an industry level, around 94% of total compensation represents salary and 6% is other remuneration. Investors will find it interesting that AP Rentals Holdings pays the bulk of its rewards through a traditional salary, instead of non-salary benefits. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

A Look at AP Rentals Holdings Limited's Growth Numbers

Over the past three years, AP Rentals Holdings Limited has seen its earnings per share (EPS) grow by 99% per year. In the last year, its revenue is up 8.4%.

Shareholders would be glad to know that the company has improved itself over the last few years. It's good to see a bit of revenue growth, as this suggests the business is able to grow sustainably. 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 AP Rentals Holdings Limited Been A Good Investment?

Few AP Rentals Holdings Limited shareholders would feel satisfied with the return of -36% over three years. So shareholders would probably want the company to be less generous with CEO compensation.

To Conclude...

AP Rentals Holdings pays its CEO a majority of compensation through a salary. Despite the growth in its earnings, the share price decline in the past three years is certainly concerning. The stock's movement is disjointed with the company's earnings growth, which ideally should move in the same direction. Shareholders would probably be keen to find out what are the other factors could be weighing down the stock. The upcoming AGM will be a chance for shareholders to question the board on key matters, such as CEO remuneration or any other issues they might have and revisit their investment thesis with regards to the company.

CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. That's why we did some digging and identified 3 warning signs for AP Rentals Holdings that you should be aware of before investing.

Important note: AP Rentals Holdings is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE 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.