We Think Some Shareholders May Hesitate To Increase Ten Pao Group Holdings Limited's (HKG:1979) CEO Compensation

Key Insights

• Ten Pao Group Holdings will host its Annual General Meeting on 14th of June
• CEO Kwong Yee Hung's total compensation includes salary of HK$5.86m
• The total compensation is 279% higher than the average for the industry
• Ten Pao Group Holdings' three-year loss to shareholders was 24% while its EPS grew by 3.4% over the past three years

Shareholders of Ten Pao Group Holdings Limited (HKG:1979) 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. Shareholders may want to question the board on the future direction of the company at the upcoming AGM on 14th of June. Voting on resolutions such as executive remuneration and other matters could also be a way to influence management. Here's our take on why we think shareholders may want to be cautious of approving a raise for the CEO at the moment.

View our latest analysis for Ten Pao Group Holdings

Comparing Ten Pao Group Holdings Limited's CEO Compensation With The Industry

Our data indicates that Ten Pao Group Holdings Limited has a market capitalization of HK$1.3b, and total annual CEO compensation was reported as HK$13m for the year to December 2023. Notably, that's an increase of 12% over the year before. We think total compensation is more important but our data shows that the CEO salary is lower, at HK$5.9m.

On examining similar-sized companies in the Hong Kong Electrical industry with market capitalizations between HK$781m and HK$3.1b, we discovered that the median CEO total compensation of that group was HK$3.5m. This suggests that Kwong Yee Hung is paid more than the median for the industry. What's more, Kwong Yee Hung holds HK$839m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component	2023	2022	Proportion (2023)
Salary	HK$5.9m	HK$5.7m	45%
Other	HK$7.3m	HK$6.1m	55%
Total Compensation	HK$13m	HK$12m	100%

On an industry level, roughly 78% of total compensation represents salary and 22% is other remuneration. In Ten Pao Group Holdings' case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

Ten Pao Group Holdings Limited's Growth

Ten Pao Group Holdings Limited has seen its earnings per share (EPS) increase by 3.4% a year over the past three years. Its revenue is down 12% over the previous year.

We would prefer it if there was revenue growth, but the modest improvement in EPS is good. In conclusion we can't form a strong opinion about business performance yet; but it's one worth watching. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Ten Pao Group Holdings Limited Been A Good Investment?

Given the total shareholder loss of 24% over three years, many shareholders in Ten Pao Group Holdings Limited are probably rather dissatisfied, to say the least. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

In Summary...

Despite the growth in its earnings, the share price decline in the past three years is certainly concerning. The stock's movement is disjointed with the company's earnings growth, which ideally should move in the same direction. Shareholders would be keen to know what's holding the stock back when earnings have grown. The upcoming AGM will be a chance for shareholders to question the board on key matters, such as CEO remuneration or any other issues they might have and revisit their investment thesis with regards to the company.

CEO compensation can have a massive impact on performance, but it's just one element. That's why we did some digging and identified 1 warning sign for Ten Pao Group Holdings that investors should think about before committing capital to this stock.

Important note: Ten Pao Group 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.