Here's Why Shareholders Should Examine Yee Hop Holdings Limited's (HKG:1662) CEO Compensation Package More Closely

Key Insights

• Yee Hop Holdings' Annual General Meeting to take place on 27th of September
• CEO Andrew Yan's total compensation includes salary of HK$1.60m
• The overall pay is comparable to the industry average
• Yee Hop Holdings' three-year loss to shareholders was 66% while its EPS was down 21% over the past three years

Shareholders will probably not be too impressed with the underwhelming results at Yee Hop Holdings Limited (HKG:1662) recently. Shareholders will be interested in what the board will have to say about turning performance around at the next AGM on 27th of September. This will be also be a chance where they can challenge the board on company direction and vote on resolutions such as executive remuneration. We present the case why we think CEO compensation is out of sync with company performance.

View our latest analysis for Yee Hop Holdings

Comparing Yee Hop Holdings Limited's CEO Compensation With The Industry

At the time of writing, our data shows that Yee Hop Holdings Limited has a market capitalization of HK$525m, and reported total annual CEO compensation of HK$2.2m for the year to March 2023. That's a notable increase of 17% on last year. In particular, the salary of HK$1.60m, makes up a huge portion of the total compensation being paid to the CEO.

For comparison, other companies in the Hong Kong Construction industry with market capitalizations below HK$1.6b, reported a median total CEO compensation of HK$2.1m. From this we gather that Andrew Yan is paid around the median for CEOs in the industry.

Component	2023	2022	Proportion (2023)
Salary	HK$1.6m	HK$1.4m	71%
Other	HK$648k	HK$565k	29%
Total Compensation	HK$2.2m	HK$1.9m	100%

Speaking on an industry level, nearly 88% of total compensation represents salary, while the remainder of 12% is other remuneration. In Yee Hop Holdings' case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.

A Look at Yee Hop Holdings Limited's Growth Numbers

Yee Hop Holdings Limited has reduced its earnings per share by 21% a year over the last three years. It saw its revenue drop 3.8% over the last year.

Overall this is not a very positive result for shareholders. And the fact that revenue is down year on year arguably paints an ugly picture. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Yee Hop Holdings Limited Been A Good Investment?

The return of -66% over three years would not have pleased Yee Hop Holdings Limited shareholders. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

To Conclude...

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, the board will get the chance to explain the steps it plans to take to improve business performance.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. That's why we did our research, and identified 4 warning signs for Yee Hop Holdings (of which 1 shouldn't be ignored!) that you should know about in order to have a holistic understanding of the stock.

Important note: Yee Hop 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.