Shareholders Will Probably Hold Off On Increasing Loco Hong Kong Holdings Limited's (HKG:8162) CEO Compensation For The Time Being

Key Insights

• Loco Hong Kong Holdings' Annual General Meeting to take place on 28th of June
• CEO Wendong Wang's total compensation includes salary of HK$1.80m
• Total compensation is similar to the industry average
• Loco Hong Kong Holdings' EPS grew by 76% over the past three years while total shareholder loss over the past three years was 4.2%

In the past three years, shareholders of Loco Hong Kong Holdings Limited (HKG:8162) have seen a loss on their investment. 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 28th of June. 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.

View our latest analysis for Loco Hong Kong Holdings

Comparing Loco Hong Kong Holdings Limited's CEO Compensation With The Industry

Our data indicates that Loco Hong Kong Holdings Limited has a market capitalization of HK$191m, and total annual CEO compensation was reported as HK$2.0m for the year to December 2023. This was the same amount the CEO received in the prior year. Notably, the salary which is HK$1.80m, represents most of the total compensation being paid.

In comparison with other companies in the Hong Kong Trade Distributors industry with market capitalizations under HK$1.6b, the reported median total CEO compensation was HK$2.3m. From this we gather that Wendong Wang is paid around the median for CEOs in the industry.

Component	2023	2022	Proportion (2023)
Salary	HK$1.8m	HK$1.8m	92%
Other	HK$162k	HK$162k	8%
Total Compensation	HK$2.0m	HK$2.0m	100%

On an industry level, around 92% of total compensation represents salary and 8% is other remuneration. Our data reveals that Loco Hong Kong Holdings allocates salary more or less in line with the wider market. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

A Look at Loco Hong Kong Holdings Limited's Growth Numbers

Loco Hong Kong Holdings Limited has seen its earnings per share (EPS) increase by 76% a year over the past three years. Its revenue is up 22,024% over the last year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. Most shareholders would be pleased to see strong revenue growth combined with EPS growth. This combo suggests a fast 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 Loco Hong Kong Holdings Limited Been A Good Investment?

Given the total shareholder loss of 4.2% over three years, many shareholders in Loco Hong Kong Holdings Limited are probably rather dissatisfied, to say the least. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

To Conclude...

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. 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.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. We did our research and identified 3 warning signs (and 2 which are a bit unpleasant) in Loco Hong Kong Holdings we think you should know about.

Switching gears from Loco Hong Kong Holdings, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.

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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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com