We Think Shareholders May Want To Consider A Review Of Basetrophy Group Holdings Limited's (HKG:8460) CEO Compensation Package

Key Insights

• Basetrophy Group Holdings will host its Annual General Meeting on 6th of June
• Total pay for CEO Chung Ho Lau includes HK$1.32m salary
• The total compensation is similar to the average for the industry
• Over the past three years, Basetrophy Group Holdings' EPS fell by 105% and over the past three years, the total loss to shareholders 70%

Basetrophy Group Holdings Limited (HKG:8460) has not performed well recently and CEO Chung Ho Lau will probably need to up their game. Shareholders will be interested in what the board will have to say about turning performance around at the next AGM on 6th of June. They will also get a chance to influence managerial decision-making through voting on resolutions such as executive remuneration, which may impact firm value in the future. The data we present below explains why we think CEO compensation is not consistent with recent performance.

Check out our latest analysis for Basetrophy Group Holdings

How Does Total Compensation For Chung Ho Lau Compare With Other Companies In The Industry?

According to our data, Basetrophy Group Holdings Limited has a market capitalization of HK$15m, and paid its CEO total annual compensation worth HK$2.2m over the year to December 2023. Notably, that's an increase of 30% over the year before. We note that the salary of HK$1.32m makes up a sizeable portion of the total compensation received by the CEO.

On comparing similar-sized companies in the Hong Kong Construction industry with market capitalizations below HK$1.6b, we found that the median total CEO compensation was HK$2.2m. So it looks like Basetrophy Group Holdings compensates Chung Ho Lau in line with the median for the industry. Moreover, Chung Ho Lau also holds HK$6.8m worth of Basetrophy Group Holdings stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component	2023	2022	Proportion (2023)
Salary	HK$1.3m	HK$874k	59%
Other	HK$928k	HK$858k	41%
Total Compensation	HK$2.2m	HK$1.7m	100%

On an industry level, around 83% of total compensation represents salary and 17% is other remuneration. Basetrophy Group Holdings sets aside a smaller share of compensation for salary, in comparison to the overall industry. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

A Look at Basetrophy Group Holdings Limited's Growth Numbers

Over the last three years, Basetrophy Group Holdings Limited has shrunk its earnings per share by 105% per year. In the last year, its revenue is up 12%.

The decline in EPS is a bit concerning. And while it's good to see some good revenue growth recently, the growth isn't really fast enough for us to put aside my concerns around EPS. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Basetrophy Group Holdings Limited Been A Good Investment?

With a total shareholder return of -70% over three years, Basetrophy Group Holdings Limited shareholders would by and large be disappointed. This suggests it would be unwise for the company to pay the CEO too generously.

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.

CEO compensation can have a massive impact on performance, but it's just one element. That's why we did some digging and identified 2 warning signs for Basetrophy Group Holdings that investors should think about before committing capital to this stock.

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.