We Think Shareholders Are Less Likely To Approve A Large Pay Rise For Alco Holdings Limited's (HKG:328) CEO For Now

The underwhelming share price performance of Alco Holdings Limited (HKG:328) in the past three years would have disappointed many shareholders. Per share earnings growth is also lacking, despite revenue growth. Shareholders will have a chance to take their concerns to the board at the next AGM on 08 September 2021 and vote on resolutions including executive compensation, which studies show may have an impact on company performance. Here's why we think shareholders should hold off on a raise for the CEO at the moment.

Check out our latest analysis for Alco Holdings

How Does Total Compensation For Wilson Leung Compare With Other Companies In The Industry?

According to our data, Alco Holdings Limited has a market capitalization of HK$184m, and paid its CEO total annual compensation worth HK$5.1m over the year to March 2021. There was no change in the compensation compared to last year. We note that the salary portion, which stands at HK$4.84m constitutes the majority of total compensation received by the CEO.

On comparing similar-sized companies in the industry with market capitalizations below HK$1.6b, we found that the median total CEO compensation was HK$3.5m. This suggests that Wilson Leung is paid more than the median for the industry. What's more, Wilson Leung holds HK$19m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component	2021	2020	Proportion (2021)
Salary	HK$4.8m	HK$4.8m	96%
Other	HK$207k	HK$207k	4%
Total Compensation	HK$5.1m	HK$5.1m	100%

On an industry level, around 80% of total compensation represents salary and 20% is other remuneration. Investors will find it interesting that Alco 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.

Alco Holdings Limited's Growth

Over the last three years, Alco Holdings Limited has shrunk its earnings per share by 18% per year. It achieved revenue growth of 33% over the last year.

The decrease in EPS could be a concern for some investors. But in contrast the revenue growth is strong, suggesting future potential for EPS growth. These two metrics are moving in different directions, so while it's hard to be confident judging performance, we think the stock is worth watching. 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 Alco Holdings Limited Been A Good Investment?

The return of -80% over three years would not have pleased Alco Holdings Limited shareholders. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

To Conclude...

Wilson receives almost all of their compensation through a salary. The company's earnings haven't grown and possibly because of that, the stock has performed poorly, resulting in a loss for the company's shareholders. Shareholders will get the chance at the upcoming AGM to question the board on key matters, such as CEO remuneration or any other issues they might have and revisit their investment thesis with regards to the company.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. In our study, we found 3 warning signs for Alco Holdings you should be aware of, and 2 of them shouldn't be ignored.

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. 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.
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