It's Unlikely That The CEO Of EDICO Holdings Limited (HKG:8450) Will See A Huge Pay Rise This Year

March 08, 2022
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In the past three years, the share price of EDICO Holdings Limited (HKG:8450) has struggled to grow and now shareholders are sitting on a loss. However, what is unusual is that EPS growth has been positive, suggesting that the share price has diverged from fundamentals. The AGM coming up on the 15 March 2022 could be an opportunity for shareholders to bring these concerns to the board's attention. Voting on resolutions such as executive remuneration and other matters could also be a way to influence management. We discuss below why we think shareholders should be cautious of approving a raise for the CEO at the moment.

See our latest analysis for EDICO Holdings

How Does Total Compensation For Amy Donati Compare With Other Companies In The Industry?

Our data indicates that EDICO Holdings Limited has a market capitalization of HK$61m, and total annual CEO compensation was reported as HK$1.8m for the year to September 2021. That's a notable increase of 21% on last year. In particular, the salary of HK$1.70m, makes up a huge portion of the total compensation being paid to the CEO.

On comparing similar-sized companies in the industry with market capitalizations below HK$1.6b, we found that the median total CEO compensation was HK$1.4m. So it looks like EDICO Holdings compensates Amy Donati in line with the median for the industry.

Component20212020Proportion (2021)
Salary HK$1.7m HK$1.4m 93%
Other HK$138k HK$138k 7%
Total CompensationHK$1.8m HK$1.5m100%

On an industry level, around 90% of total compensation represents salary and 10% is other remuneration. EDICO Holdings is largely mirroring the industry average when it comes to the share a salary enjoys in overall compensation. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

SEHK:8450 CEO Compensation March 8th 2022

A Look at EDICO Holdings Limited's Growth Numbers

EDICO Holdings Limited has seen its earnings per share (EPS) increase by 37% a year over the past three years. Its revenue is down 38% 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. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has EDICO Holdings Limited Been A Good Investment?

Given the total shareholder loss of 27% over three years, many shareholders in EDICO Holdings Limited are probably rather dissatisfied, to say the least. So shareholders would probably want the company to be less generous with CEO compensation.

In Summary...

Despite the growth in its earnings, the share price decline in the past three years is certainly concerning. The stock's movement is disjointed with the company's earnings growth, which ideally should move in the same direction. If there are some unknown variables that are influencing the stock's price, surely shareholders would have some concerns. 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.

CEO compensation can have a massive impact on performance, but it's just one element. That's why we did some digging and identified 2 warning signs for EDICO Holdings that investors should think about before committing capital to this stock.

Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.

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