Increases to CEO Compensation Might Be Put On Hold For Now at Prosperous Industrial (Holdings) Limited (HKG:1731)

Key Insights

• Prosperous Industrial (Holdings)'s Annual General Meeting to take place on 19th of June
• Total pay for CEO Edmond Yeung includes US$293.0k salary
• The total compensation is 112% higher than the average for the industry
• Prosperous Industrial (Holdings)'s EPS grew by 71% over the past three years while total shareholder loss over the past three years was 33%

Shareholders of Prosperous Industrial (Holdings) Limited (HKG:1731) will have been dismayed by the negative share price return over the last three years. What is concerning is that despite positive EPS growth, the share price has not tracked the trend in fundamentals. Shareholders may want to question the board on the future direction of the company at the upcoming AGM on 19th of June. They could also try to influence management and firm direction through voting on resolutions such as executive remuneration and other company matters. We think shareholders might be reluctant to increase compensation for the CEO at the moment, according to our analysis below.

View our latest analysis for Prosperous Industrial (Holdings)

How Does Total Compensation For Edmond Yeung Compare With Other Companies In The Industry?

At the time of writing, our data shows that Prosperous Industrial (Holdings) Limited has a market capitalization of HK$773m, and reported total annual CEO compensation of US$551k for the year to December 2023. That's a notable increase of 25% on last year. Notably, the salary which is US$293.0k, represents a considerable chunk of the total compensation being paid.

In comparison with other companies in the Hong Kong Luxury industry with market capitalizations under HK$1.6b, the reported median total CEO compensation was US$260k. This suggests that Edmond Yeung is paid more than the median for the industry.

Component	2023	2022	Proportion (2023)
Salary	US$293k	US$259k	53%
Other	US$258k	US$182k	47%
Total Compensation	US$551k	US$441k	100%

On an industry level, roughly 94% of total compensation represents salary and 6% is other remuneration. Prosperous Industrial (Holdings) sets aside a smaller share of compensation for salary, in comparison to the overall industry. 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.

A Look at Prosperous Industrial (Holdings) Limited's Growth Numbers

Prosperous Industrial (Holdings) Limited's earnings per share (EPS) grew 71% per year over the last three years. It saw its revenue drop 4.6% over the last year.

Shareholders would be glad to know that the company has improved itself over the last few years. The lack of revenue growth isn't ideal, but it is the bottom line that counts most in business. 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 Prosperous Industrial (Holdings) Limited Been A Good Investment?

The return of -33% over three years would not have pleased Prosperous Industrial (Holdings) Limited shareholders. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

To Conclude...

The fact that shareholders are sitting on a loss on the value of their shares in the past few years is certainly disconcerting. The stock's movement is disjointed with the company's earnings growth, which ideally should move in the same direction. Shareholders would probably be keen to find out what are the other factors could be weighing down the stock. 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.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. That's why we did some digging and identified 2 warning signs for Prosperous Industrial (Holdings) that you should be aware of before investing.

Important note: Prosperous Industrial (Holdings) is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.

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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.