Shareholders May Not Be So Generous With Neway Group Holdings Limited's (HKG:55) CEO Compensation And Here's Why

Key Insights

• Neway Group Holdings to hold its Annual General Meeting on 7th of June
• Salary of HK$1.39m is part of CEO Chai Hong Suek's total remuneration
• The total compensation is similar to the average for the industry
• Neway Group Holdings' three-year loss to shareholders was 51% while its EPS was down 24% over the past three years

Shareholders of Neway Group Holdings Limited (HKG:55) will have been dismayed by the negative share price return over the last three years. Per share earnings growth is also lacking, despite revenue growth. Shareholders will have a chance to take their concerns to the board at the next AGM on 7th of June and vote on resolutions including executive compensation, which studies show may have an impact on company performance. Here's our take on why we think shareholders might be hesitant about approving a raise at the moment.

View our latest analysis for Neway Group Holdings

How Does Total Compensation For Chai Hong Suek Compare With Other Companies In The Industry?

Our data indicates that Neway Group Holdings Limited has a market capitalization of HK$59m, and total annual CEO compensation was reported as HK$1.4m for the year to December 2023. That is, the compensation was roughly the same as last year. Notably, the salary which is HK$1.39m, represents most of the total compensation being paid.

On comparing similar-sized companies in the Hong Kong Commercial Services industry with market capitalizations below HK$1.6b, we found that the median total CEO compensation was HK$1.9m. From this we gather that Chai Hong Suek is paid around the median for CEOs in the industry.

Component	2023	2022	Proportion (2023)
Salary	HK$1.4m	HK$1.4m	99%
Other	HK$18k	HK$18k	1%
Total Compensation	HK$1.4m	HK$1.4m	100%

Talking in terms of the industry, salary represented approximately 82% of total compensation out of all the companies we analyzed, while other remuneration made up 18% of the pie. Neway Group Holdings pays a high salary, concentrating more on this aspect of compensation in comparison to non-salary pay. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

Neway Group Holdings Limited's Growth

Over the last three years, Neway Group Holdings Limited has shrunk its earnings per share by 24% per year. It achieved revenue growth of 22% over the last year.

The decrease in EPS could be a concern for some investors. But in contrast the revenue growth is strong, suggesting future potential for EPS growth. In conclusion we can't form a strong opinion about business performance yet; but it's one worth watching. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Neway Group Holdings Limited Been A Good Investment?

The return of -51% over three years would not have pleased Neway Group Holdings Limited shareholders. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

To Conclude...

Neway Group Holdings pays its CEO a majority of compensation through a salary. The loss to shareholders over the past three years is certainly concerning and possibly has something to do with the fact that the company's earnings haven't grown. Shareholders will get the chance at the upcoming AGM to question the board on key matters, such as CEO remuneration or any other issues they might have and revisit their investment thesis with 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 Neway Group 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.