Shareholders Will Probably Hold Off On Increasing YGM Trading Limited's (HKG:375) CEO Compensation For The Time Being

Key Insights

• YGM Trading's Annual General Meeting to take place on 27th of September
• CEO William Fu's total compensation includes salary of HK$1.81m
• Total compensation is similar to the industry average
• Over the past three years, YGM Trading's EPS grew by 30% and over the past three years, the total loss to shareholders 42%

In the past three years, the share price of YGM Trading Limited (HKG:375) has struggled to grow and now shareholders are sitting on a loss. However, what is unusual is that EPS growth has been positive, suggesting that the share price has diverged from fundamentals. These are some of the concerns that shareholders may want to bring up at the next AGM held on 27th of September. They could also try to influence management and firm direction through voting on resolutions such as executive remuneration and other company matters. Here's our take on why we think shareholders may want to be cautious of approving a raise for the CEO at the moment.

Check out our latest analysis for YGM Trading

Comparing YGM Trading Limited's CEO Compensation With The Industry

Our data indicates that YGM Trading Limited has a market capitalization of HK$186m, and total annual CEO compensation was reported as HK$2.1m for the year to March 2024. This means that the compensation hasn't changed much from last year. In particular, the salary of HK$1.81m, makes up a huge portion of the total compensation being paid to the CEO.

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. So it looks like YGM Trading compensates William Fu in line with the median for the industry. Furthermore, William Fu directly owns HK$2.3m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2024	2023	Proportion (2024)
Salary	HK$1.8m	HK$1.8m	87%
Other	HK$281k	HK$222k	13%
Total Compensation	HK$2.1m	HK$2.0m	100%

Talking in terms of the industry, salary represented approximately 91% of total compensation out of all the companies we analyzed, while other remuneration made up 9% of the pie. There isn't a significant difference between YGM Trading and the broader market, in terms of salary allocation in the overall compensation package. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

YGM Trading Limited's Growth

YGM Trading Limited has seen its earnings per share (EPS) increase by 30% a year over the past three years. It achieved revenue growth of 11% over the last year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's a real positive to see this sort of revenue growth in a single year. That suggests a healthy and growing business. 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 YGM Trading Limited Been A Good Investment?

With a total shareholder return of -42% over three years, YGM Trading Limited shareholders would by and large be disappointed. So shareholders would probably want the company to be less generous with CEO compensation.

To Conclude...

The fact that shareholders are sitting on a loss on the value of their shares in the past few years is certainly disconcerting. The stock's movement is disjointed with the company's earnings growth, which ideally should move in the same direction. Shareholders would be keen to know what's holding the stock back when earnings have grown. These concerns should be addressed at the upcoming AGM, where shareholders can question the board and evaluate if their judgement and decision making is still in line with their expectations.

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 4 warning signs (and 1 which is potentially serious) in YGM Trading 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. 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.