Here's Why We Think UTS Marketing Solutions Holdings Limited's (HKG:6113) CEO Compensation Looks Fair for the time being

Key Insights

• UTS Marketing Solutions Holdings will host its Annual General Meeting on 26th of June
• Total pay for CEO Koon Lee includes RM1.06m salary
• The total compensation is similar to the average for the industry
• UTS Marketing Solutions Holdings' total shareholder return over the past three years was 6.8% while its EPS was down 14% over the past three years

Despite positive share price growth of 6.8% for UTS Marketing Solutions Holdings Limited (HKG:6113) over the last few years, earnings growth has been disappointing, which suggests something is amiss. The upcoming AGM on 26th of June may be an opportunity for shareholders to bring up any concerns they may have for the board’s attention. One way that shareholders can influence managerial decisions is through voting on CEO and executive remuneration packages, which studies show could impact company performance. From what we gathered, we think shareholders should be wary of raising CEO compensation until the company shows some marked improvement.

Check out our latest analysis for UTS Marketing Solutions Holdings

Comparing UTS Marketing Solutions Holdings Limited's CEO Compensation With The Industry

Our data indicates that UTS Marketing Solutions Holdings Limited has a market capitalization of HK$380m, and total annual CEO compensation was reported as RM1.4m for the year to December 2023. This means that the compensation hasn't changed much from last year. In particular, the salary of RM1.06m, makes up a huge portion of the total compensation being paid to the CEO.

For comparison, other companies in the Hong Kong Professional Services industry with market capitalizations below HK$1.6b, reported a median total CEO compensation of RM1.1m. This suggests that UTS Marketing Solutions Holdings remunerates its CEO largely in line with the industry average. Furthermore, Koon Lee directly owns HK$67m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2023	2022	Proportion (2023)
Salary	RM1.1m	RM1.1m	77%
Other	RM307k	RM303k	23%
Total Compensation	RM1.4m	RM1.4m	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. In UTS Marketing Solutions Holdings' case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

A Look at UTS Marketing Solutions Holdings Limited's Growth Numbers

UTS Marketing Solutions Holdings Limited has reduced its earnings per share by 14% a year over the last three years. Its revenue is up 8.5% over the last year.

The decline in EPS is a bit concerning. And the modest revenue growth over 12 months isn't much comfort against the reduced EPS. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has UTS Marketing Solutions Holdings Limited Been A Good Investment?

UTS Marketing Solutions Holdings Limited has generated a total shareholder return of 6.8% over three years, so most shareholders wouldn't be too disappointed. Although, there's always room to improve. As a result, investors in the company might be reluctant about agreeing to increase CEO pay in the future, before seeing an improvement on their returns.

In Summary...

Shareholder returns, while positive, should be looked at along with earnings, which have not grown at all recently. This makes us think the share price momentum may slow in the future. Shareholders should make the most of the coming opportunity to question the board on key concerns they may have and revisit their investment thesis with regards to the company.

CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. In our study, we found 3 warning signs for UTS Marketing Solutions Holdings you should be aware of, and 1 of them is concerning.

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.

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