We Discuss Why Casablanca Group Limited's (HKG:2223) CEO Compensation May Be Closely Reviewed

Key Insights

• Casablanca Group to hold its Annual General Meeting on 23rd of May
• Salary of HK$3.54m is part of CEO Sze Tsan Cheng's total remuneration
• Total compensation is 69% above industry average
• Casablanca Group's EPS declined by 111% over the past three years while total shareholder loss over the past three years was 37%

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The results at Casablanca Group Limited (HKG:2223) have been quite disappointing recently and CEO Sze Tsan Cheng bears some responsibility for this. At the upcoming AGM on 23rd of May, shareholders can hear from the board including their plans for turning around performance. It would also be an opportunity for shareholders to influence management through voting on company resolutions such as executive remuneration, which could impact the firm significantly. The data we present below explains why we think CEO compensation is not consistent with recent performance.

View our latest analysis for Casablanca Group

How Does Total Compensation For Sze Tsan Cheng Compare With Other Companies In The Industry?

Our data indicates that Casablanca Group Limited has a market capitalization of HK$73m, and total annual CEO compensation was reported as HK$4.0m for the year to December 2024. That's a modest increase of 3.9% on the prior year. In particular, the salary of HK$3.54m, makes up a huge portion of the total compensation being paid to the CEO.

In comparison with other companies in the Hong Kong Consumer Durables industry with market capitalizations under HK$1.6b, the reported median total CEO compensation was HK$2.4m. Accordingly, our analysis reveals that Casablanca Group Limited pays Sze Tsan Cheng north of the industry median. Furthermore, Sze Tsan Cheng directly owns HK$1.2m worth of shares in the company.

Component	2024	2023	Proportion (2024)
Salary	HK$3.5m	HK$3.4m	89%
Other	HK$453k	HK$434k	11%
Total Compensation	HK$4.0m	HK$3.8m	100%

Speaking on an industry level, nearly 81% of total compensation represents salary, while the remainder of 19% is other remuneration. Our data reveals that Casablanca Group allocates salary more or less in line with the wider market. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

Casablanca Group Limited's Growth

Casablanca Group Limited has reduced its earnings per share by 111% a year over the last three years. It saw its revenue drop 13% over the last year.

The decline in EPS is a bit concerning. And the impression is worse when you consider revenue is down year-on-year. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. 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 Casablanca Group Limited Been A Good Investment?

The return of -37% over three years would not have pleased Casablanca Group Limited shareholders. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

Not only have shareholders not seen a favorable return on their investment, but the business hasn't performed well either. Few shareholders would be willing to award the CEO with a pay raise. At the upcoming AGM, management will get a chance to explain how they plan to get the business back on track and address the concerns from investors.

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 3 warning signs for Casablanca Group (of which 2 are concerning!) that you should know about in order to have a holistic understanding of the stock.

Switching gears from Casablanca Group, 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.