Shareholders Will Probably Hold Off On Increasing Wing Chi Holdings Limited's (HKG:6080) CEO Compensation For The Time Being

Key Insights

• Wing Chi Holdings' Annual General Meeting to take place on 16th of August
• CEO Cheuk Kam Li's total compensation includes salary of HK$3.44m
• Total compensation is 53% above industry average
• Wing Chi Holdings' three-year loss to shareholders was 61% while its EPS grew by 107% over the past three years

In the past three years, the share price of Wing Chi Holdings Limited (HKG:6080) has struggled to grow and now shareholders are sitting on a loss. However, what is unusual is that EPS growth has been positive, suggesting that the share price has diverged from fundamentals. Shareholders may want to question the board on the future direction of the company at the upcoming AGM on 16th of August. Voting on resolutions such as executive remuneration and other matters could also be a way to influence management. We discuss below why we think shareholders should be cautious of approving a raise for the CEO at the moment.

See our latest analysis for Wing Chi Holdings

Comparing Wing Chi Holdings Limited's CEO Compensation With The Industry

At the time of writing, our data shows that Wing Chi Holdings Limited has a market capitalization of HK$49m, and reported total annual CEO compensation of HK$3.5m for the year to March 2024. That's mostly flat as compared to the prior year's compensation. Notably, the salary which is HK$3.44m, represents most of the total compensation being paid.

In comparison with other companies in the Hong Kong Construction industry with market capitalizations under HK$1.6b, the reported median total CEO compensation was HK$2.3m. This suggests that Cheuk Kam Li is paid more than the median for the industry. Moreover, Cheuk Kam Li also holds HK$25m worth of Wing Chi Holdings stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component	2024	2023	Proportion (2024)
Salary	HK$3.4m	HK$3.5m	99%
Other	HK$18k	HK$18k	1%
Total Compensation	HK$3.5m	HK$3.5m	100%

On an industry level, roughly 84% of total compensation represents salary and 16% is other remuneration. Wing Chi Holdings pays a high salary, concentrating more on this aspect of compensation in comparison to non-salary pay. 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 Wing Chi Holdings Limited's Growth Numbers

Over the past three years, Wing Chi Holdings Limited has seen its earnings per share (EPS) grow by 107% per year. It achieved revenue growth of 25% over the last year.

This demonstrates that the company has been improving recently and is good news for the shareholders. Most shareholders would be pleased to see strong revenue growth combined with EPS growth. This combo suggests a fast growing 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 Wing Chi Holdings Limited Been A Good Investment?

With a total shareholder return of -61% over three years, Wing Chi Holdings Limited shareholders would by and large be disappointed. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

In Summary...

Wing Chi Holdings pays its CEO a majority of compensation through a salary. 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. Shareholders would be keen to know what's holding the stock back when earnings have grown. At the upcoming AGM, shareholders will get the opportunity to discuss any issues with the board, including those related to CEO remuneration and assess if the board's plan will likely improve performance in the future.

CEO pay is simply one of the many factors that need to be considered while examining business performance. In our study, we found 2 warning signs for Wing Chi Holdings you should be aware of, and 1 of them is concerning.

Important note: Wing Chi 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.