We Think Shareholders Are Less Likely To Approve A Large Pay Rise For IBI Group Holdings Limited's (HKG:1547) CEO For Now

In the past three years, the share price of IBI Group Holdings Limited (HKG:1547) has struggled to generate growth for its shareholders. However, what is unusual is that EPS growth has been positive, suggesting that the share price has diverged from fundamentals. The AGM coming up on the 17 September 2021 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.

See our latest analysis for IBI Group Holdings

How Does Total Compensation For Neil Howard Compare With Other Companies In The Industry?

At the time of writing, our data shows that IBI Group Holdings Limited has a market capitalization of HK$268m, and reported total annual CEO compensation of HK$4.5m for the year to March 2021. That's a notable increase of 14% on last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at HK$2.0m.

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$1.8m. Hence, we can conclude that Neil Howard is remunerated higher than the industry median. What's more, Neil Howard holds HK$137m 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$2.0m	HK$2.4m	44%
Other	HK$2.5m	HK$1.5m	56%
Total Compensation	HK$4.5m	HK$4.0m	100%

On an industry level, around 87% of total compensation represents salary and 13% is other remuneration. IBI Group Holdings sets aside a smaller share of compensation for salary, in comparison to the overall industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

A Look at IBI Group Holdings Limited's Growth Numbers

IBI Group Holdings Limited's earnings per share (EPS) grew 44% per year over the last three years. Its revenue is down 5.8% over the previous year.

This demonstrates that the company has been improving recently and is good news for the shareholders. While it would be good to see revenue growth, profits matter more in the end. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has IBI Group Holdings Limited Been A Good Investment?

Since shareholders would have lost about 11% over three years, some IBI Group Holdings Limited investors would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

Shareholders have not seen their shares grow in value, rather they have seen their shares decline. The stock's movement is disjointed with the company's earnings growth, which ideally should move in the same direction. If there are some unknown variables that are influencing the stock's price, surely shareholders would have some concerns. 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.

While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. We did our research and spotted 2 warning signs for IBI Group Holdings that investors should look into moving forward.

Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.

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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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