We Think Some Shareholders May Hesitate To Increase Beng Soon Machinery Holdings Limited's (HKG:1987) CEO Compensation

Key Insights

• Beng Soon Machinery Holdings' Annual General Meeting to take place on 31st of May
• Total pay for CEO Chee Beng Tan includes S$434.0k salary
• Total compensation is 214% above industry average
• Beng Soon Machinery Holdings' three-year loss to shareholders was 90% while its EPS grew by 88% over the past three years

Shareholders of Beng Soon Machinery Holdings Limited (HKG:1987) 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 31st of May. They could also try to influence management and firm direction through voting on resolutions such as executive remuneration and other company matters. Here's our take on why we think shareholders may want to be cautious of approving a raise for the CEO at the moment.

Check out our latest analysis for Beng Soon Machinery Holdings

How Does Total Compensation For Chee Beng Tan Compare With Other Companies In The Industry?

At the time of writing, our data shows that Beng Soon Machinery Holdings Limited has a market capitalization of HK$245m, and reported total annual CEO compensation of S$1.2m for the year to December 2023. Notably, that's an increase of 25% over the year before. While we always look at total compensation first, our analysis shows that the salary component is less, at S$434k.

On comparing similar-sized companies in the Hong Kong Construction industry with market capitalizations below HK$1.6b, we found that the median total CEO compensation was S$373k. This suggests that Chee Beng Tan is paid more than the median for the industry. Furthermore, Chee Beng Tan directly owns HK$84m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2023	2022	Proportion (2023)
Salary	S$434k	S$384k	37%
Other	S$739k	S$556k	63%
Total Compensation	S$1.2m	S$940k	100%

On an industry level, roughly 83% of total compensation represents salary and 17% is other remuneration. In Beng Soon Machinery Holdings' case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

Beng Soon Machinery Holdings Limited's Growth

Over the past three years, Beng Soon Machinery Holdings Limited has seen its earnings per share (EPS) grow by 88% per year. In the last year, its revenue is down 10%.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. The lack of revenue growth isn't ideal, but it is the bottom line that counts most in business. 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 Beng Soon Machinery Holdings Limited Been A Good Investment?

With a total shareholder return of -90% over three years, Beng Soon Machinery Holdings Limited shareholders would by and large be disappointed. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

The fact that shareholders are sitting on a loss on the value of their shares in the past few years is certainly disconcerting. 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. 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 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 4 warning signs for Beng Soon Machinery Holdings that investors should be aware of in a dynamic business environment.

Switching gears from Beng Soon Machinery Holdings, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.

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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.