We Think Hingtex Holdings Limited's (HKG:1968) CEO Compensation Package Needs To Be Put Under A Microscope

Key Insights

• Hingtex Holdings will host its Annual General Meeting on 28th of May
• CEO Stephen Tung's total compensation includes salary of HK$3.09m
• The total compensation is 60% higher than the average for the industry
• Hingtex Holdings' three-year loss to shareholders was 18% while its EPS was down 23% over the past three years

The results at Hingtex Holdings Limited (HKG:1968) have been quite disappointing recently and CEO Stephen Tung bears some responsibility for this. Shareholders will be interested in what the board will have to say about turning performance around at the next AGM on 28th of May. 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. From our analysis, we think CEO compensation may need a review in light of the recent performance.

See our latest analysis for Hingtex Holdings

How Does Total Compensation For Stephen Tung Compare With Other Companies In The Industry?

Our data indicates that Hingtex Holdings Limited has a market capitalization of HK$99m, and total annual CEO compensation was reported as HK$3.1m for the year to December 2023. Notably, that's a decrease of 13% over the year before. Notably, the salary which is HK$3.09m, represents most of the total compensation being paid.

On comparing similar-sized companies in the Hong Kong Luxury industry with market capitalizations below HK$1.6b, we found that the median total CEO compensation was HK$1.9m. Accordingly, our analysis reveals that Hingtex Holdings Limited pays Stephen Tung north of the industry median.

Component	2023	2022	Proportion (2023)
Salary	HK$3.1m	HK$3.6m	99%
Other	HK$18k	HK$18k	1%
Total Compensation	HK$3.1m	HK$3.6m	100%

Speaking on an industry level, nearly 94% of total compensation represents salary, while the remainder of 6% is other remuneration. Hingtex Holdings pays a high salary, concentrating more on this aspect of compensation in comparison to non-salary pay. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

Hingtex Holdings Limited's Growth

Over the last three years, Hingtex Holdings Limited has shrunk its earnings per share by 23% per year. In the last year, its revenue is down 34%.

Few shareholders would be pleased to read that EPS have declined. This is compounded by the fact revenue is actually down on last year. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. 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 Hingtex Holdings Limited Been A Good Investment?

Since shareholders would have lost about 18% over three years, some Hingtex Holdings Limited investors would surely be feeling negative emotions. So shareholders would probably want the company to be less generous with CEO compensation.

In Summary...

Hingtex Holdings pays its CEO a majority of 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, they can question the management's plans and strategies to turn performance around and reassess their investment thesis in regards to the company.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. That's why we did our research, and identified 2 warning signs for Hingtex Holdings (of which 1 is a bit unpleasant!) that you should know about in order to have a holistic understanding of the stock.

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.