We Think C Cheng Holdings Limited's (HKG:1486) CEO Compensation Package Needs To Be Put Under A Microscope

Key Insights

• C Cheng Holdings to hold its Annual General Meeting on 4th of June
• Salary of HK$6.83m is part of CEO Chin Shing Fu's total remuneration
• Total compensation is 383% above industry average
• C Cheng Holdings' EPS declined by 114% over the past three years while total shareholder loss over the past three years was 57%

Shareholders will probably not be too impressed with the underwhelming results at C Cheng Holdings Limited (HKG:1486) recently. Shareholders will be interested in what the board will have to say about turning performance around at the next AGM on 4th 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. From our analysis, we think CEO compensation may need a review in light of the recent performance.

Check out our latest analysis for C Cheng Holdings

How Does Total Compensation For Chin Shing Fu Compare With Other Companies In The Industry?

Our data indicates that C Cheng Holdings Limited has a market capitalization of HK$144m, and total annual CEO compensation was reported as HK$8.5m for the year to December 2023. That's a notable decrease of 17% on last year. In particular, the salary of HK$6.83m, makes up a huge portion of the total compensation being paid to the CEO.

In comparison with other companies in the Hong Kong Professional Services industry with market capitalizations under HK$1.6b, the reported median total CEO compensation was HK$1.8m. This suggests that Chin Shing Fu is paid more than the median for the industry. Moreover, Chin Shing Fu also holds HK$17m worth of C Cheng 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$6.8m	HK$6.4m	80%
Other	HK$1.7m	HK$3.9m	20%
Total Compensation	HK$8.5m	HK$10m	100%

Talking in terms of the industry, salary represented approximately 89% of total compensation out of all the companies we analyzed, while other remuneration made up 11% of the pie. Our data reveals that C Cheng 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.

C Cheng Holdings Limited's Growth

Over the last three years, C Cheng Holdings Limited has shrunk its earnings per share by 114% per year. Its revenue is down 15% over the previous year.

Few shareholders would be pleased to read that EPS have declined. And the fact that revenue is down year on year arguably paints an ugly picture. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. 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 C Cheng Holdings Limited Been A Good Investment?

With a total shareholder return of -57% over three years, C Cheng Holdings Limited shareholders would by and large be disappointed. Therefore, it might be upsetting for shareholders if the CEO were paid 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, they can question the management's plans and strategies to turn performance around and reassess their investment thesis in regards to the company.

CEO pay is simply one of the many factors that need to be considered while examining business performance. In our study, we found 2 warning signs for C Cheng Holdings you should be aware of, and 1 of them doesn't sit too well with us.

Important note: C Cheng 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.

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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.