Here's Why Shareholders May Consider Paying WLS Holdings Limited's (HKG:8021) CEO A Little More

Shareholders will be pleased by the robust performance of WLS Holdings Limited (HKG:8021) recently and this will be kept in mind in the upcoming AGM on 22 October 2021. They will probably be more interested in hearing the board discuss future initiatives to further improve the business as they vote on resolutions such as executive remuneration. In our analysis below, we discuss why we think the CEO compensation looks acceptable and the case for a raise.

View our latest analysis for WLS Holdings

Comparing WLS Holdings Limited's CEO Compensation With the industry

At the time of writing, our data shows that WLS Holdings Limited has a market capitalization of HK$704m, and reported total annual CEO compensation of HK$1.0m for the year to April 2021. This means that the compensation hasn't changed much from last year. In particular, the salary of HK$979.0k, makes up a huge portion of the total compensation being paid to 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. Accordingly, WLS Holdings pays its CEO under the industry median.

Component	2021	2020	Proportion (2021)
Salary	HK$979k	HK$979k	94%
Other	HK$68k	HK$48k	6%
Total Compensation	HK$1.0m	HK$1.0m	100%

On an industry level, roughly 90% of total compensation represents salary and 10% is other remuneration. Although there is a difference in how total compensation is set, WLS Holdings more or less reflects the market in terms of setting the salary. 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.

A Look at WLS Holdings Limited's Growth Numbers

Over the last three years, WLS Holdings Limited has shrunk its earnings per share by 9.3% per year. Its revenue is up 28% over the last year.

The decrease in EPS could be a concern for some investors. But in contrast the revenue growth is strong, suggesting future potential for EPS growth. It's hard to reach a conclusion about business performance right now. This may be one to watch. 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 WLS Holdings Limited Been A Good Investment?

WLS Holdings Limited has generated a total shareholder return of 17% over three years, so most shareholders would be reasonably content. But they probably wouldn't be so happy as to think the CEO should be paid more than is normal, for companies around this size.

To Conclude...

Overall, the company hasn't done too poorly performance-wise, but we would like to see some improvement. If it manages to keep up the current streak, CEO remuneration could well be one of shareholders' least concerns. Instead, investors might be more interested in discussions that would help manage their longer-term growth expectations such as company business strategies and future growth potential.

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 3 warning signs for WLS Holdings that you should be aware of before investing.

Important note: WLS 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.

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 (at) simplywallst.com.