Increases to Twintek Investment Holdings Limited's (HKG:6182) CEO Compensation Might Cool off for now

By
Simply Wall St
Published
August 17, 2021
SEHK:6182
Source: Shutterstock

The underwhelming share price performance of Twintek Investment Holdings Limited (HKG:6182) in the past three years would have disappointed many shareholders. However, what is unusual is that EPS growth has been positive, suggesting that the share price has diverged from fundamentals. These are some of the concerns that shareholders may want to bring up at the next AGM held on 24 August 2021. They could also influence management through voting on resolutions such as executive remuneration. 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 Twintek Investment Holdings

How Does Total Compensation For Wing Cheung Lo Compare With Other Companies In The Industry?

At the time of writing, our data shows that Twintek Investment Holdings Limited has a market capitalization of HK$176m, and reported total annual CEO compensation of HK$3.0m for the year to March 2021. That's a modest increase of 6.0% on the prior year. We note that the salary portion, which stands at HK$2.71m constitutes the majority of total compensation received by the CEO.

For comparison, other companies in the industry with market capitalizations below HK$1.6b, reported a median total CEO compensation of HK$1.8m. Hence, we can conclude that Wing Cheung Lo is remunerated higher than the industry median.

Component20212020Proportion (2021)
Salary HK$2.7m HK$2.6m 90%
Other HK$298k HK$248k 10%
Total CompensationHK$3.0m HK$2.8m100%

Talking in terms of the industry, salary represented approximately 90% of total compensation out of all the companies we analyzed, while other remuneration made up 10% of the pie. Our data reveals that Twintek Investment Holdings allocates salary more or less in line with the wider market. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.

ceo-compensation
SEHK:6182 CEO Compensation August 17th 2021

Twintek Investment Holdings Limited's Growth

Over the past three years, Twintek Investment Holdings Limited has seen its earnings per share (EPS) grow by 57% per year. In the last year, its revenue is up 99%.

This demonstrates that the company has been improving recently and is good news for the shareholders. It's great to see that revenue growth is strong, too. These metrics suggest the business is growing strongly. 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 Twintek Investment Holdings Limited Been A Good Investment?

With a total shareholder return of -51% over three years, Twintek Investment Holdings Limited shareholders would by and large be disappointed. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

To Conclude...

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 probably be keen to find out what are the other factors could be weighing down the stock. 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. We identified 5 warning signs for Twintek Investment Holdings (1 is significant!) that you should be aware of before investing here.

Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.

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