This Is Why Shareholders May Want To Hold Back On A Pay Rise For Hands Form Holdings Limited's (HKG:1920) CEO

Key Insights

• Hands Form Holdings' Annual General Meeting to take place on 28th of June
• CEO Adam Cheung's total compensation includes salary of HK$644.0k
• The overall pay is 72% below the industry average
• Hands Form Holdings' three-year loss to shareholders was 74% while its EPS was down 21% over the past three years

The disappointing performance at Hands Form Holdings Limited (HKG:1920) will make some shareholders rather disheartened. At the upcoming AGM on 28th of June, shareholders may have the opportunity to influence management to turn the performance around by voting on resolutions such as executive remuneration and other matters. We think most shareholders will probably pass the CEO compensation, based on what we gathered.

See our latest analysis for Hands Form Holdings

Comparing Hands Form Holdings Limited's CEO Compensation With The Industry

At the time of writing, our data shows that Hands Form Holdings Limited has a market capitalization of HK$90m, and reported total annual CEO compensation of HK$662k for the year to December 2023. That's mostly flat as compared to the prior year's compensation. In particular, the salary of HK$644.0k, makes up a huge portion of the total compensation being paid to the CEO.

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. That is to say, Adam Cheung is paid under the industry median.

Component	2023	2022	Proportion (2023)
Salary	HK$644k	HK$660k	97%
Other	HK$18k	HK$18k	3%
Total Compensation	HK$662k	HK$678k	100%

Talking in terms of the industry, salary represented approximately 89% of total compensation out of all the companies we analyzed, while other remuneration made up 11% of the pie. Investors will find it interesting that Hands Form Holdings pays the bulk of its rewards through a traditional salary, instead of non-salary benefits. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

Hands Form Holdings Limited's Growth

Over the last three years, Hands Form Holdings Limited has shrunk its earnings per share by 21% per year. In the last year, its revenue is down 29%.

The decline in EPS is a bit concerning. And the fact that revenue is down year on year arguably paints an ugly picture. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Hands Form Holdings Limited Been A Good Investment?

With a total shareholder return of -74% over three years, Hands Form Holdings Limited shareholders would by and large be disappointed. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

In Summary...

Adam receives almost all of their compensation through a salary. 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, the board will get the chance to explain the steps it plans to take to improve business performance.

CEO pay is simply one of the many factors that need to be considered while examining business performance. In our study, we found 3 warning signs for Hands Form Holdings you should be aware of, and 1 of them is significant.

Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies that have HIGH return on equity 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com