Shareholders May Be Wary Of Increasing Tat Hong Equipment Service Co., Ltd.'s (HKG:2153) CEO Compensation Package

Key Insights

• Tat Hong Equipment Service's Annual General Meeting to take place on 26th of September
• Salary of CN¥2.00m is part of CEO Sean Yau's total remuneration
• Total compensation is 55% above industry average
• Tat Hong Equipment Service's EPS declined by 118% over the past three years while total shareholder loss over the past three years was 8.2%

Shareholders will probably not be too impressed with the underwhelming results at Tat Hong Equipment Service Co., Ltd. (HKG:2153) recently. Shareholders will be interested in what the board will have to say about turning performance around at the next AGM on 26th of September. It would also be an opportunity for shareholders to influence management through voting on company resolutions such as executive remuneration, which could impact the firm significantly. The data we present below explains why we think CEO compensation is not consistent with recent performance.

View our latest analysis for Tat Hong Equipment Service

How Does Total Compensation For Sean Yau Compare With Other Companies In The Industry?

According to our data, Tat Hong Equipment Service Co., Ltd. has a market capitalization of HK$1.3b, and paid its CEO total annual compensation worth CN¥2.6m over the year to March 2024. We note that's a small decrease of 7.7% on last year. In particular, the salary of CN¥2.00m, makes up a huge portion of the total compensation being paid to the CEO.

On comparing similar companies from the Hong Kong Construction industry with market caps ranging from HK$779m to HK$3.1b, we found that the median CEO total compensation was CN¥1.7m. This suggests that Sean Yau is paid more than the median for the industry. Furthermore, Sean Yau directly owns HK$5.5m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2024	2023	Proportion (2024)
Salary	CN¥2.0m	CN¥2.0m	78%
Other	CN¥574k	CN¥790k	22%
Total Compensation	CN¥2.6m	CN¥2.8m	100%

Talking in terms of the industry, salary represented approximately 84% of total compensation out of all the companies we analyzed, while other remuneration made up 16% of the pie. Tat Hong Equipment Service is largely mirroring the industry average when it comes to the share a salary enjoys in overall compensation. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

A Look at Tat Hong Equipment Service Co., Ltd.'s Growth Numbers

Over the last three years, Tat Hong Equipment Service Co., Ltd. has shrunk its earnings per share by 118% per year. Its revenue is down 11% over the previous year.

The decline in EPS is a bit concerning. And the fact that revenue is down year on year arguably paints an ugly picture. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Tat Hong Equipment Service Co., Ltd. Been A Good Investment?

Given the total shareholder loss of 8.2% over three years, many shareholders in Tat Hong Equipment Service Co., Ltd. are probably rather dissatisfied, to say the least. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

Not only have shareholders not seen a favorable return on their investment, but the business hasn't performed well either. Few shareholders would be willing to award the CEO with a pay raise. At the upcoming AGM, the board will get the chance to explain the steps it plans to take to improve business performance.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. That's why we did some digging and identified 2 warning signs for Tat Hong Equipment Service that investors should think about before committing capital to this stock.

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.