Should Shareholders Reconsider E-Commodities Holdings Limited's (HKG:1733) CEO Compensation Package?

Key Insights

• E-Commodities Holdings' Annual General Meeting to take place on 30th of May
• Total pay for CEO Xinyi Cao includes HK$45.9m salary
• The total compensation is 2,728% higher than the average for the industry
• Over the past three years, E-Commodities Holdings' EPS fell by 33% and over the past three years, the total loss to shareholders 35%

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E-Commodities Holdings Limited (HKG:1733) has not performed well recently and CEO Xinyi Cao 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 30th of May. 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 E-Commodities Holdings

Comparing E-Commodities Holdings Limited's CEO Compensation With The Industry

According to our data, E-Commodities Holdings Limited has a market capitalization of HK$2.1b, and paid its CEO total annual compensation worth HK$47m over the year to December 2024. Notably, that's a decrease of 39% over the year before. Notably, the salary which is HK$45.9m, represents most of the total compensation being paid.

In comparison with other companies in the Hong Kong Trade Distributors industry with market capitalizations ranging from HK$783m to HK$3.1b, the reported median CEO total compensation was HK$1.7m. Accordingly, our analysis reveals that E-Commodities Holdings Limited pays Xinyi Cao north of the industry median. Moreover, Xinyi Cao also holds HK$4.3m worth of E-Commodities Holdings stock directly under their own name.

Component	2024	2023	Proportion (2024)
Salary	HK$46m	HK$76m	98%
Other	HK$923k	HK$268k	2%
Total Compensation	HK$47m	HK$77m	100%

Talking in terms of the industry, salary represented approximately 92% of total compensation out of all the companies we analyzed, while other remuneration made up 8% of the pie. Investors will find it interesting that E-Commodities Holdings pays the bulk of its rewards through a traditional salary, instead of non-salary benefits. 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.

E-Commodities Holdings Limited's Growth

Over the last three years, E-Commodities Holdings Limited has shrunk its earnings per share by 33% per year. In the last year, its revenue is down 3.5%.

The decline in EPS is a bit concerning. And the impression is worse when you consider revenue is down year-on-year. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. 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 E-Commodities Holdings Limited Been A Good Investment?

Few E-Commodities Holdings Limited shareholders would feel satisfied with the return of -35% over three years. So shareholders would probably want the company to be less generous with CEO compensation.

To Conclude...

Xinyi receives almost all of their compensation through a salary. 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, management will get a chance to explain how they plan to get the business back on track and address the concerns from investors.

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. We've identified 2 warning signs for E-Commodities Holdings that investors should be aware of in a dynamic business environment.

Important note: E-Commodities 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.