Here's Why It's Unlikely That Indigo Star Holdings Limited's (HKG:8373) CEO Will See A Pay Rise This Year

Shareholders will probably not be too impressed with the underwhelming results at Indigo Star Holdings Limited (HKG:8373) recently. Shareholders can take the chance to hold the board and management accountable for the unsatisfactory performance at the next AGM on 30 June 2021. This will be also be a chance where they can challenge the board on company direction and vote on resolutions such as executive remuneration. The data we present below explains why we think CEO compensation is not consistent with recent performance.

View our latest analysis for Indigo Star Holdings

How Does Total Compensation For Cheng Seng Goh Compare With Other Companies In The Industry?

According to our data, Indigo Star Holdings Limited has a market capitalization of HK$120m, and paid its CEO total annual compensation worth S$582k over the year to December 2020. That's a notable decrease of 42% on last year. Notably, the salary which is S$550.0k, represents most of the total compensation being paid.

In comparison with other companies in the industry with market capitalizations under HK$1.6b, the reported median total CEO compensation was S$306k. Hence, we can conclude that Cheng Seng Goh is remunerated higher than the industry median.

Component	2020	2019	Proportion (2020)
Salary	S$550k	S$960k	95%
Other	S$32k	S$43k	5%
Total Compensation	S$582k	S$1.0m	100%

On an industry level, roughly 91% of total compensation represents salary and 9% is other remuneration. Indigo Star Holdings is largely mirroring the industry average when it comes to the share a salary enjoys in overall compensation. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

Indigo Star Holdings Limited's Growth

Indigo Star Holdings Limited has reduced its earnings per share by 125% a year over the last three years. It saw its revenue drop 59% over the last year.

The decline in EPS is a bit concerning. This is compounded by the fact revenue is actually down on last year. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. 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 Indigo Star Holdings Limited Been A Good Investment?

Few Indigo Star Holdings Limited shareholders would feel satisfied with the return of -85% over three years. So shareholders would probably want the company to be less generous with CEO compensation.

In Summary...

Along with the business performing poorly, shareholders have suffered with poor share price returns on their investments, suggesting that there's little to no chance of them being in favor of a CEO pay raise. At the upcoming AGM, the board will get the chance to explain the steps it plans to take to improve business performance.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. That's why we did our research, and identified 2 warning signs for Indigo Star Holdings (of which 1 is a bit unpleasant!) that you should know about in order to have a holistic understanding of the stock.

Switching gears from Indigo Star 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.

When trading stocks or any other investment, use the platform considered by many to be the Professional's Gateway to the Worlds Market, Interactive Brokers. You get the lowest-cost* trading on stocks, options, futures, forex, bonds and funds worldwide from a single integrated account. Promoted

This article by Simply Wall St is general in nature. 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.
^*Interactive Brokers Rated Lowest Cost Broker by StockBrokers.com Annual Online Review 2020

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