Should Shareholders Have Second Thoughts About A Pay Rise For Watts International Maritime Company Limited's (HKG:2258) CEO This Year?

Key Insights

• Watts International Maritime to hold its Annual General Meeting on 25th of June
• CEO Yun Wan's total compensation includes salary of CN¥557.0k
• The overall pay is 35% below the industry average
• Watts International Maritime's three-year loss to shareholders was 61% while its EPS was down 13% over the past three years

The disappointing performance at Watts International Maritime Company Limited (HKG:2258) will make some shareholders rather disheartened. There is an opportunity for shareholders to influence management to turn the performance around by voting on resolutions such as executive remuneration at the AGM coming up on 25th of June. We think most shareholders will probably pass the CEO compensation, based on what we gathered.

View our latest analysis for Watts International Maritime

Comparing Watts International Maritime Company Limited's CEO Compensation With The Industry

Our data indicates that Watts International Maritime Company Limited has a market capitalization of HK$164m, and total annual CEO compensation was reported as CN¥1.3m for the year to December 2023. Notably, that's an increase of 18% over the year before. While we always look at total compensation first, our analysis shows that the salary component is less, at CN¥557k.

For comparison, other companies in the Hong Kong Construction industry with market capitalizations below HK$1.6b, reported a median total CEO compensation of CN¥2.0m. In other words, Watts International Maritime pays its CEO lower than the industry median. Moreover, Yun Wan also holds HK$3.7m worth of Watts International Maritime stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component	2023	2022	Proportion (2023)
Salary	CN¥557k	CN¥558k	43%
Other	CN¥749k	CN¥549k	57%
Total Compensation	CN¥1.3m	CN¥1.1m	100%

Speaking on an industry level, nearly 83% of total compensation represents salary, while the remainder of 17% is other remuneration. Watts International Maritime sets aside a smaller share of compensation for salary, in comparison to the overall industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

Watts International Maritime Company Limited's Growth

Watts International Maritime Company Limited has reduced its earnings per share by 13% a year over the last three years. It achieved revenue growth of 3.3% over the last year.

Few shareholders would be pleased to read that EPS have declined. The modest increase in revenue in the last year isn't enough to make us overlook the disappointing change in EPS. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. While we don't have analyst forecasts for the company, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.

Has Watts International Maritime Company Limited Been A Good Investment?

Few Watts International Maritime Company Limited shareholders would feel satisfied with the return of -61% over three years. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

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, management will get a chance to explain how they plan to get the business back on track and address the concerns from investors.

CEO pay is simply one of the many factors that need to be considered while examining business performance. We did our research and identified 4 warning signs (and 2 which are potentially serious) in Watts International Maritime we think you should know about.

Important note: Watts International Maritime 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com