We Think Shareholders May Want To Consider A Review Of AP Rentals Holdings Limited's (HKG:1496) CEO Compensation Package

AP Rentals Holdings Limited (HKG:1496) has not performed well recently and CEO Pong Sing Lau will probably need to up their game. Shareholders will be interested in what the board will have to say about turning performance around at the next AGM on 26 August 2021. They will also get a chance to influence managerial decision-making through voting on resolutions such as executive remuneration, which may impact firm value in the future. The data we present below explains why we think CEO compensation is not consistent with recent performance.

View 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$124m, and paid its CEO total annual compensation worth HK$2.8m over the year to March 2021. That is, the compensation was roughly the same as last year. We note that the salary portion, which stands at HK$2.78m constitutes the majority of total compensation received by the CEO.

On comparing similar-sized companies in the industry with market capitalizations below HK$1.6b, we found that the median total CEO compensation was HK$2.5m. From this we gather that Pong Sing Lau is paid around the median for CEOs in the industry. What's more, Pong Sing Lau holds HK$52m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component	2021	2020	Proportion (2021)
Salary	HK$2.8m	HK$2.8m	99%
Other	HK$36k	HK$36k	1%
Total Compensation	HK$2.8m	HK$2.8m	100%

Talking in terms of the industry, salary represented approximately 86% of total compensation out of all the companies we analyzed, while other remuneration made up 14% of the pie. AP Rentals Holdings has gone down a largely traditional route, paying Pong Sing Lau a high salary, giving it preference over non-salary benefits. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

AP Rentals Holdings Limited's Growth

AP Rentals Holdings Limited has reduced its earnings per share by 95% a year over the last three years. Its revenue is up 1.8% over the last year.

Overall this is not a very positive result for shareholders. The modest increase in revenue in the last year isn't enough to make us overlook the disappointing change in EPS. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. We don't have analyst forecasts, but you could get a better understanding of its growth by checking out this more 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 -66% over three years. So shareholders would probably want the company to be less generous with CEO compensation.

To Conclude...

Pong Sing receives almost all of their compensation through a salary. Given that shareholders haven't seen any positive returns on their investment, not to mention the lack of earnings growth, this may suggest that few of them would be willing to award the CEO with a pay rise. At the upcoming AGM, they can question the management's plans and strategies to turn performance around and reassess their investment thesis in regards to the company.

CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. We did our research and identified 3 warning signs (and 1 which is potentially serious) in AP Rentals Holdings we think you should know about.

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.
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