Shareholders Will Probably Hold Off On Increasing ECI Technology Holdings Limited's (HKG:8013) CEO Compensation For The Time Being

Key Insights

• ECI Technology Holdings to hold its Annual General Meeting on 18 January 2023
• CEO Tai Wing Ng's total compensation includes salary of HK$1.32m
• Total compensation is similar to the industry average
• ECI Technology Holdings' EPS grew by 93% over the past three years while total shareholder return over the past three years was -66%

The underwhelming share price performance of ECI Technology Holdings Limited (HKG:8013) in the past three years would have disappointed many shareholders. What is concerning is that despite positive EPS growth, the share price has not tracked the trend in fundamentals. These are some of the concerns that shareholders may want to bring up at the next AGM held on 18 January 2023. They could also influence management through voting on resolutions such as executive remuneration. We think shareholders might be reluctant to increase compensation for the CEO at the moment, according to our analysis below.

See our latest analysis for ECI Technology Holdings

How Does Total Compensation For Tai Wing Ng Compare With Other Companies In The Industry?

Our data indicates that ECI Technology Holdings Limited has a market capitalization of HK$53m, and total annual CEO compensation was reported as HK$1.4m for the year to August 2022. This was the same as last year. In particular, the salary of HK$1.32m, makes up a huge portion of the total compensation being paid to the CEO.

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$1.8m. So it looks like ECI Technology Holdings compensates Tai Wing Ng in line with the median for the industry. Furthermore, Tai Wing Ng directly owns HK$29m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2022	2021	Proportion (2022)
Salary	HK$1.3m	HK$1.3m	98%
Other	HK$30k	HK$30k	2%
Total Compensation	HK$1.4m	HK$1.4m	100%

Speaking on an industry level, nearly 75% of total compensation represents salary, while the remainder of 25% is other remuneration. ECI Technology Holdings is focused on going down a more traditional approach and is paying a higher portion of compensation through salary, as compared to non-salary benefits. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

A Look at ECI Technology Holdings Limited's Growth Numbers

ECI Technology Holdings Limited has seen its earnings per share (EPS) increase by 93% a year over the past three years. Its revenue is down 5.6% over the previous year.

Shareholders would be glad to know that the company has improved itself over the last few years. While it would be good to see revenue growth, profits matter more in the end. 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 ECI Technology Holdings Limited Been A Good Investment?

Few ECI Technology Holdings Limited shareholders would feel satisfied with the return of -66% over three years. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

Tai Wing receives almost all of their compensation through a salary. Despite the growth in its earnings, the share price decline in the past three years is certainly concerning. The fact that the stock price hasn't grown along with earnings may indicate that other issues may be affecting that stock. Shareholders would be keen to know what's holding the stock back when earnings have grown. At the upcoming AGM, shareholders will get the opportunity to discuss any issues with the board, including those related to CEO remuneration and assess if the board's plan will likely improve performance in the future.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. In our study, we found 2 warning signs for ECI Technology Holdings you should be aware of, and 1 of them is significant.

Switching gears from ECI Technology Holdings, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.

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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.