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

Key Insights

• C Cheng Holdings will host its Annual General Meeting on 21st of May
• Salary of HK$4.90m is part of CEO Chin Shing Fu's total remuneration
• The total compensation is 197% higher than the average for the industry
• Over the past three years, C Cheng Holdings' EPS fell by 33% and over the past three years, the total loss to shareholders 69%

We've discovered 2 warning signs about C Cheng Holdings. View them for free.

The results at C Cheng Holdings Limited (HKG:1486) have been quite disappointing recently and CEO Chin Shing Fu bears some responsibility for this. Shareholders can take the chance to hold the board and management accountable for the unsatisfactory performance at the next AGM on 21st of May. This will be also be a chance where they can challenge the board on company direction and vote on resolutions such as executive remuneration. We present the case why we think CEO compensation is out of sync with company performance.

View our latest analysis for C Cheng Holdings

Comparing C Cheng Holdings Limited's CEO Compensation With The Industry

At the time of writing, our data shows that C Cheng Holdings Limited has a market capitalization of HK$61m, and reported total annual CEO compensation of HK$5.3m for the year to December 2024. That's a notable decrease of 37% on last year. We note that the salary portion, which stands at HK$4.90m constitutes the majority of total compensation received by 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. Accordingly, our analysis reveals that C Cheng Holdings Limited pays Chin Shing Fu north of the industry median. Furthermore, Chin Shing Fu directly owns HK$7.3m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2024	2023	Proportion (2024)
Salary	HK$4.9m	HK$6.8m	92%
Other	HK$429k	HK$1.7m	8%
Total Compensation	HK$5.3m	HK$8.5m	100%

On an industry level, roughly 92% of total compensation represents salary and 8% is other remuneration. Our data reveals that C Cheng Holdings allocates salary more or less in line with the wider market. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.

C Cheng Holdings Limited's Growth

Over the last three years, C Cheng Holdings Limited has shrunk its earnings per share by 33% per year. Its revenue is down 12% over the previous year.

The decline in EPS is a bit concerning. And the impression is worse when you consider revenue is down year-on-year. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. While we don't have analyst forecasts for the company, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.

Has C Cheng Holdings Limited Been A Good Investment?

Few C Cheng Holdings Limited shareholders would feel satisfied with the return of -69% over three years. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

Not only have shareholders not seen a favorable return on their investment, but the business hasn't performed well either. Few shareholders would be willing to award the CEO with a 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 compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. We've identified 2 warning signs for C Cheng Holdings that investors should be aware of in a dynamic business environment.

Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies that have HIGH return on equity 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.