Should Shareholders Reconsider Texwinca Holdings Limited's (HKG:321) CEO Compensation Package?

Texwinca Holdings Limited (HKG:321) has not performed well recently and CEO Kit Chung Ting will probably need to up their game. At the upcoming AGM on 12 August 2021, shareholders can hear from the board including their plans for turning around performance. This will be also be a chance where they can challenge the board on company direction and vote on resolutions such as executive remuneration. The data we present below explains why we think CEO compensation is not consistent with recent performance.

See our latest analysis for Texwinca Holdings

Comparing Texwinca Holdings Limited's CEO Compensation With the industry

At the time of writing, our data shows that Texwinca Holdings Limited has a market capitalization of HK$2.4b, and reported total annual CEO compensation of HK$8.7m for the year to March 2021. Notably, that's a decrease of 39% over the year before. Notably, the salary which is HK$6.04m, represents most of the total compensation being paid.

On comparing similar companies from the same industry with market caps ranging from HK$1.6b to HK$6.2b, we found that the median CEO total compensation was HK$6.2m. This suggests that Kit Chung Ting is paid more than the median for the industry. Moreover, Kit Chung Ting also holds HK$11m worth of Texwinca Holdings stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component	2021	2020	Proportion (2021)
Salary	HK$6.0m	HK$7.5m	70%
Other	HK$2.6m	HK$6.6m	30%
Total Compensation	HK$8.7m	HK$14m	100%

Speaking on an industry level, nearly 92% of total compensation represents salary, while the remainder of 8% is other remuneration. Texwinca Holdings sets aside a smaller share of compensation for salary, in comparison to the overall industry. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

A Look at Texwinca Holdings Limited's Growth Numbers

Over the last three years, Texwinca Holdings Limited has shrunk its earnings per share by 3.4% per year. Its revenue is down 3.7% over the previous year.

The decline in EPS is a bit concerning. And the fact that revenue is down year on year arguably paints an ugly picture. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Texwinca Holdings Limited Been A Good Investment?

With a total shareholder return of -37% over three years, Texwinca Holdings Limited shareholders would by and large be disappointed. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

In Summary...

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, management will get a chance to explain how they plan to get the business back on track and address the concerns from investors.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. We did our research and identified 2 warning signs (and 1 which shouldn't be ignored) in Texwinca Holdings we think you should know about.

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. 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.
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