Shareholders Will Probably Hold Off On Increasing IMS Group Holdings Limited's (HKG:8136) CEO Compensation For The Time Being

The underwhelming share price performance of IMS Group Holdings Limited (HKG:8136) in the past three years would have disappointed many shareholders. Despite positive EPS growth in the past few years, the share price hasn't tracked the fundamental performance of the company. Shareholders may want to question the board on the future direction of the company at the upcoming AGM on 23 August 2021. 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.

View our latest analysis for IMS Group Holdings

Comparing IMS Group Holdings Limited's CEO Compensation With the industry

Our data indicates that IMS Group Holdings Limited has a market capitalization of HK$110m, and total annual CEO compensation was reported as HK$2.8m for the year to March 2021. Notably, that's an increase of 9.1% over the year before. In particular, the salary of HK$2.56m, makes up a huge portion of the total compensation being paid to the CEO.

On comparing similar-sized companies in the industry with market capitalizations below HK$1.6b, we found that the median total CEO compensation was HK$1.3m. Accordingly, our analysis reveals that IMS Group Holdings Limited pays Andrew Tam north of the industry median. Furthermore, Andrew Tam directly owns HK$54m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2021	2020	Proportion (2021)
Salary	HK$2.6m	HK$2.2m	92%
Other	HK$231k	HK$388k	8%
Total Compensation	HK$2.8m	HK$2.6m	100%

On an industry level, around 85% of total compensation represents salary and 15% is other remuneration. Although there is a difference in how total compensation is set, IMS Group Holdings more or less reflects the market in terms of setting the salary. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

IMS Group Holdings Limited's Growth

IMS Group Holdings Limited's earnings per share (EPS) grew 19% per year over the last three years. In the last year, its revenue is up 18%.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's a real positive to see this sort of revenue growth in a single year. That suggests a healthy and 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 IMS Group Holdings Limited Been A Good Investment?

The return of -62% over three years would not have pleased IMS Group Holdings Limited shareholders. 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. If there are some unknown variables that are influencing the stock's price, surely shareholders would have some concerns. 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.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. In our study, we found 5 warning signs for IMS Group Holdings you should be aware of, and 1 of them doesn't sit too well with us.

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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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.
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