Shareholders May Be Wary Of Increasing OKG Technology Holdings Limited's (HKG:1499) CEO Compensation Package

OKG Technology Holdings Limited (HKG:1499) has not performed well recently and CEO Jeffrey Ren will probably need to up their game. Shareholders can take the chance to hold the board and management accountable for the unsatisfactory performance at the next AGM on 25 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. We present the case why we think CEO compensation is out of sync with company performance.

See our latest analysis for OKG Technology Holdings

Comparing OKG Technology Holdings Limited's CEO Compensation With the industry

At the time of writing, our data shows that OKG Technology Holdings Limited has a market capitalization of HK$1.7b, and reported total annual CEO compensation of HK$4.5m for the year to March 2021. That's a notable increase of 15% on last year. Notably, the salary which is HK$3.20m, represents most of the total compensation being paid.

On examining similar-sized companies in the industry with market capitalizations between HK$779m and HK$3.1b, we discovered that the median CEO total compensation of that group was HK$2.9m. Hence, we can conclude that Jeffrey Ren is remunerated higher than the industry median.

Component	2021	2020	Proportion (2021)
Salary	HK$3.2m	HK$3.3m	71%
Other	HK$1.3m	HK$628k	29%
Total Compensation	HK$4.5m	HK$3.9m	100%

On an industry level, around 90% of total compensation represents salary and 10% is other remuneration. OKG Technology Holdings sets aside a smaller share of compensation for salary, in comparison to the overall industry. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

A Look at OKG Technology Holdings Limited's Growth Numbers

Over the last three years, OKG Technology Holdings Limited has shrunk its earnings per share by 64% per year. Its revenue is down 21% over the previous year.

Few shareholders would be pleased to read that EPS have declined. This is compounded by the fact revenue is actually down on last year. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. 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 OKG Technology Holdings Limited Been A Good Investment?

With a total shareholder return of -48% over three years, OKG Technology Holdings Limited shareholders would by and large be disappointed. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

To Conclude...

Along with the business performing poorly, shareholders have suffered with poor share price returns on their investments, suggesting that there's little to no chance of them being in favor of a CEO pay raise. 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.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. We identified 2 warning signs for OKG Technology Holdings (1 is a bit unpleasant!) that you should be aware of before investing here.

Switching gears from OKG Technology 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.
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