We Discuss Why Sitoy Group Holdings Limited's (HKG:1023) CEO Compensation May Be Closely Reviewed

Sitoy Group Holdings Limited (HKG:1023) has not performed well recently and CEO Wo Fai Yeung will probably need to up their game. Shareholders will be interested in what the board will have to say about turning performance around at the next AGM on 22 November 2021. They will also get a chance to influence managerial decision-making through voting on resolutions such as executive remuneration, which may impact firm value in the future. We present the case why we think CEO compensation is out of sync with company performance.

Check out our latest analysis for Sitoy Group Holdings

Comparing Sitoy Group Holdings Limited's CEO Compensation With the industry

At the time of writing, our data shows that Sitoy Group Holdings Limited has a market capitalization of HK$518m, and reported total annual CEO compensation of HK$4.3m for the year to June 2021. That's a modest increase of 7.3% on the prior year. We note that the salary portion, which stands at HK$3.58m constitutes the majority of total compensation received by the CEO.

For comparison, other companies in the industry with market capitalizations below HK$1.6b, reported a median total CEO compensation of HK$2.1m. Hence, we can conclude that Wo Fai Yeung is remunerated higher than the industry median. Moreover, Wo Fai Yeung also holds HK$127m worth of Sitoy Group Holdings stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component	2021	2020	Proportion (2021)
Salary	HK$3.6m	HK$3.1m	84%
Other	HK$699k	HK$856k	16%
Total Compensation	HK$4.3m	HK$4.0m	100%

On an industry level, around 91% of total compensation represents salary and 9% is other remuneration. Sitoy Group 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.

Sitoy Group Holdings Limited's Growth

Sitoy Group Holdings Limited has reduced its earnings per share by 111% a year over the last three years. It saw its revenue drop 21% over the last year.

Overall this is not a very positive result for shareholders. And the fact that revenue is down year on year arguably paints an ugly picture. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Sitoy Group Holdings Limited Been A Good Investment?

Few Sitoy Group Holdings Limited shareholders would feel satisfied with the return of -71% over three years. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

To Conclude...

Along with the business performing poorly, shareholders have suffered with poor share price returns on their investments, suggesting that there's little to no chance of them being in favor of a CEO 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 pay is simply one of the many factors that need to be considered while examining business performance. We identified 3 warning signs for Sitoy Group Holdings (1 makes us a bit uncomfortable!) that you should be aware of before investing here.

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.

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.

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