Here's Why SG Group Holdings Limited's (HKG:1657) CEO Compensation Is The Least Of Shareholders Concerns

Shareholders may be wondering what CEO Charles Choi plans to do to improve the less than great performance at SG Group Holdings Limited (HKG:1657) recently. At the next AGM coming up on 26 October 2022, they can influence managerial decision making through voting on resolutions, including executive remuneration. Voting on executive pay could be a powerful way to influence management, as studies have shown that the right compensation incentives impact company performance. We have prepared some analysis below to show that CEO compensation looks to be reasonable.

Check out our latest analysis for SG Group Holdings

How Does Total Compensation For Charles Choi Compare With Other Companies In The Industry?

At the time of writing, our data shows that SG Group Holdings Limited has a market capitalization of HK$177m, and reported total annual CEO compensation of HK$983k for the year to April 2022. We note that's an increase of 41% above last year. In particular, the salary of HK$936.0k, makes up a huge portion of the total compensation being paid to the CEO.

In comparison with other companies in the industry with market capitalizations under HK$1.6b, the reported median total CEO compensation was HK$2.0m. In other words, SG Group Holdings pays its CEO lower than the industry median. Furthermore, Charles Choi directly owns HK$132m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2022	2021	Proportion (2022)
Salary	HK$936k	HK$663k	95%
Other	HK$47k	HK$33k	5%
Total Compensation	HK$983k	HK$696k	100%

On an industry level, around 93% of total compensation represents salary and 7% is other remuneration. Investors will find it interesting that SG Group Holdings pays the bulk of its rewards through a traditional salary, instead of non-salary benefits. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.

SG Group Holdings Limited's Growth

Over the last three years, SG Group Holdings Limited has shrunk its earnings per share by 70% per year. It achieved revenue growth of 40% over the last year.

Investors would be a bit wary of companies that have lower EPS 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. While we don't have analyst forecasts for the company, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.

Has SG Group Holdings Limited Been A Good Investment?

With a three year total loss of 7.8% for the shareholders, SG Group Holdings Limited would certainly have some dissatisfied shareholders. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

Charles receives almost all of their compensation through a salary. The lack of share price growth will be weighing on shareholders' minds as they go into the AGM. One reason for the lacklustre price performance could be that earnings just haven't grown much. Shareholders will get the chance to question the board on key concerns and revisit their investment thesis with regards to the company.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. That's why we did our research, and identified 4 warning signs for SG Group Holdings (of which 1 is a bit concerning!) that you should know about in order to have a holistic understanding of the 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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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.