Shareholders May Be More Conservative With Sundart Holdings Limited's (HKG:1568) CEO Compensation For Now

Key Insights

• Sundart Holdings to hold its Annual General Meeting on 3rd of June
• Salary of HK$2.40m is part of CEO Tak Kwan Ng's total remuneration
• The total compensation is 433% higher than the average for the industry
• Over the past three years, Sundart Holdings' EPS fell by 6.7% and over the past three years, the total loss to shareholders 63%

The underwhelming share price performance of Sundart Holdings Limited (HKG:1568) in the past three years would have disappointed many shareholders. Per share earnings growth is also lacking, despite revenue growth. In light of this performance, shareholders will have a chance to question the board in the upcoming AGM on 3rd of June, where they can impact on future company performance by voting on resolutions, including executive compensation. Here's our take on why we think shareholders might be hesitant about approving a raise at the moment.

Check out our latest analysis for Sundart Holdings

Comparing Sundart Holdings Limited's CEO Compensation With The Industry

At the time of writing, our data shows that Sundart Holdings Limited has a market capitalization of HK$896m, and reported total annual CEO compensation of HK$12m for the year to December 2023. There was no change in the compensation compared to last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at HK$2.4m.

On comparing similar-sized companies in the Hong Kong Consumer Durables industry with market capitalizations below HK$1.6b, we found that the median total CEO compensation was HK$2.3m. Accordingly, our analysis reveals that Sundart Holdings Limited pays Tak Kwan Ng north of the industry median.

Component	2023	2022	Proportion (2023)
Salary	HK$2.4m	HK$2.4m	19%
Other	HK$10m	HK$10m	81%
Total Compensation	HK$12m	HK$12m	100%

Speaking on an industry level, nearly 89% of total compensation represents salary, while the remainder of 11% is other remuneration. Sundart Holdings sets aside a smaller share of compensation for salary, in comparison to the overall industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

A Look at Sundart Holdings Limited's Growth Numbers

Sundart Holdings Limited has reduced its earnings per share by 6.7% a year over the last three years. Its revenue is up 17% over the last year.

The reduction in EPS, over three years, is arguably concerning. But on the other hand, revenue growth is strong, suggesting a brighter future. These two metrics are moving in different directions, so while it's hard to be confident judging performance, we think the stock is worth watching. 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 Sundart Holdings Limited Been A Good Investment?

With a total shareholder return of -63% over three years, Sundart Holdings Limited shareholders would by and large be disappointed. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

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. The upcoming AGM will provide shareholders the opportunity to revisit the company’s remuneration policies and evaluate if the board’s judgement and decision-making is aligned with that of the company’s shareholders.

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. That's why we did some digging and identified 1 warning sign for Sundart Holdings that you should be aware of before investing.

Switching gears from Sundart 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.