Increases to Heng Hup Holdings Limited's (HKG:1891) CEO Compensation Might Cool off for now

Key Insights

• Heng Hup Holdings to hold its Annual General Meeting on 15th of June
• Total pay for CEO Kok Chin Sia includes RM1.47m salary
• The overall pay is 42% above the industry average
• Over the past three years, Heng Hup Holdings' EPS grew by 0.6% and over the past three years, the total loss to shareholders 33%

Shareholders of Heng Hup Holdings Limited (HKG:1891) will have been dismayed by the negative share price return over the last three years. Despite positive EPS growth in the past few years, the share price hasn't tracked the fundamental performance of the company. These are some of the concerns that shareholders may want to bring up at the next AGM held on 15th of June. Voting on resolutions such as executive remuneration and other matters could also be a way to influence management. We think shareholders might be reluctant to increase compensation for the CEO at the moment, according to our analysis below.

See our latest analysis for Heng Hup Holdings

How Does Total Compensation For Kok Chin Sia Compare With Other Companies In The Industry?

Our data indicates that Heng Hup Holdings Limited has a market capitalization of HK$111m, and total annual CEO compensation was reported as RM1.7m for the year to December 2023. That's a notable increase of 26% on last year. In particular, the salary of RM1.47m, makes up a huge portion of the total compensation being paid to the CEO.

In comparison with other companies in the Hong Kong Trade Distributors industry with market capitalizations under HK$1.6b, the reported median total CEO compensation was RM1.2m. Hence, we can conclude that Kok Chin Sia is remunerated higher than the industry median. Furthermore, Kok Chin Sia directly owns HK$5.3m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2023	2022	Proportion (2023)
Salary	RM1.5m	RM1.2m	84%
Other	RM275k	RM203k	16%
Total Compensation	RM1.7m	RM1.4m	100%

On an industry level, roughly 92% of total compensation represents salary and 8% is other remuneration. Our data reveals that Heng Hup Holdings allocates salary more or less in line with the wider market. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

Heng Hup Holdings Limited's Growth

Heng Hup Holdings Limited saw earnings per share stay pretty flat over the last three years. It saw its revenue drop 4.1% over the last year.

We would prefer it if there was revenue growth, but the modest improvement in EPS is good. It's hard to reach a conclusion about business performance right now. This may be one to watch. 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 Heng Hup Holdings Limited Been A Good Investment?

The return of -33% over three years would not have pleased Heng Hup Holdings Limited shareholders. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

Despite the growth in its earnings, the share price decline in the past three years is certainly concerning. A huge lag in share price growth when earnings have grown may indicate there could be other issues that are affecting the company at the moment that the market is focused on. Shareholders would be keen to know what's holding the stock back when earnings have grown. At the upcoming AGM, shareholders will get the opportunity to discuss any issues with the board, including those related to CEO remuneration and assess if the board's plan will likely improve performance in the future.

CEO pay is simply one of the many factors that need to be considered while examining business performance. We identified 4 warning signs for Heng Hup Holdings (2 are concerning!) that you should be aware of before investing here.

Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies that have HIGH return on equity 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.