Increases to CEO Compensation Might Be Put On Hold For Now at Vicon Holdings Limited (HKG:3878)

Key Insights

• Vicon Holdings to hold its Annual General Meeting on 12th of September
• Total pay for CEO Kwok Chun Chow includes HK$3.34m salary
• The overall pay is 49% above the industry average
• Vicon Holdings' three-year loss to shareholders was 66% while its EPS grew by 112% over the past three years

Shareholders of Vicon Holdings Limited (HKG:3878) will have been dismayed by the negative share price return over the last three years. However, what is unusual is that EPS growth has been positive, suggesting that the share price has diverged from fundamentals. The AGM coming up on the 12th of September could be an opportunity for shareholders to bring these concerns to the board's attention. They could also influence management through voting on resolutions such as executive remuneration. We think shareholders might be reluctant to increase compensation for the CEO at the moment, according to our analysis below.

Check out our latest analysis for Vicon Holdings

How Does Total Compensation For Kwok Chun Chow Compare With Other Companies In The Industry?

According to our data, Vicon Holdings Limited has a market capitalization of HK$106m, and paid its CEO total annual compensation worth HK$3.4m over the year to March 2024. That's a notable increase of 96% on last year. Notably, the salary which is HK$3.34m, represents most of the total compensation being paid.

For comparison, other companies in the Hong Kong Construction industry with market capitalizations below HK$1.6b, reported a median total CEO compensation of HK$2.3m. Hence, we can conclude that Kwok Chun Chow is remunerated higher than the industry median. Furthermore, Kwok Chun Chow directly owns HK$33m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2024	2023	Proportion (2024)
Salary	HK$3.3m	HK$1.7m	99%
Other	HK$18k	HK$18k	1%
Total Compensation	HK$3.4m	HK$1.7m	100%

On an industry level, around 84% of total compensation represents salary and 16% is other remuneration. Investors will find it interesting that Vicon Holdings pays the bulk of its rewards through a traditional salary, instead of non-salary benefits. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

Vicon Holdings Limited's Growth

Over the past three years, Vicon Holdings Limited has seen its earnings per share (EPS) grow by 112% per year. It achieved revenue growth of 17% over the last year.

Shareholders would be glad to know that the company has improved itself over the last few years. It's a real positive to see this sort of revenue growth in a single year. That suggests a healthy and growing business. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Vicon Holdings Limited Been A Good Investment?

Few Vicon Holdings Limited shareholders would feel satisfied with the return of -66% over three years. So shareholders would probably want the company to be less generous with CEO compensation.

To Conclude...

Vicon Holdings pays its CEO a majority of compensation through a salary. 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. These concerns should be addressed at the upcoming AGM, where shareholders can question the board and evaluate if their judgement and decision making is still in line with their expectations.

CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. We did our research and identified 3 warning signs (and 1 which is concerning) in Vicon Holdings we think you should know about.

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.