Sky Light Holdings Limited's (HKG:3882) CEO Compensation Looks Acceptable To Us And Here's Why

Key Insights

• Sky Light Holdings' Annual General Meeting to take place on 30th of May
• Salary of HK$857.0k is part of CEO Terry Tang's total remuneration
• The overall pay is 62% below the industry average
• Sky Light Holdings' EPS declined by 17% over the past three years while total shareholder return over the past three years was 539%

The performance at Sky Light Holdings Limited (HKG:3882) has been rather lacklustre of late and shareholders may be wondering what CEO Terry Tang is planning to do about this. At the next AGM coming up on 30th of May, they can influence managerial decision making through voting on resolutions, including executive remuneration. Setting appropriate executive remuneration to align with the interests of shareholders may also be a way to influence the company performance in the long run. We think CEO compensation looks appropriate given the data we have put together.

Check out our latest analysis for Sky Light Holdings

Comparing Sky Light Holdings Limited's CEO Compensation With The Industry

According to our data, Sky Light Holdings Limited has a market capitalization of HK$1.2b, and paid its CEO total annual compensation worth HK$875k over the year to December 2023. That is, the compensation was roughly the same as last year. In particular, the salary of HK$857.0k, makes up a huge portion of the total compensation being paid to the CEO.

On comparing similar-sized companies in the Hong Kong Consumer Durables industry with market capitalizations below HK$1.6b, we found that the median total CEO compensation was HK$2.3m. That is to say, Terry Tang is paid under the industry median. What's more, Terry Tang holds HK$596m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component	2023	2022	Proportion (2023)
Salary	HK$857k	HK$810k	98%
Other	HK$18k	HK$86k	2%
Total Compensation	HK$875k	HK$896k	100%

Talking in terms of the industry, salary represented approximately 89% of total compensation out of all the companies we analyzed, while other remuneration made up 11% of the pie. Sky Light Holdings has gone down a largely traditional route, paying Terry Tang a high salary, giving it preference over non-salary benefits. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

Sky Light Holdings Limited's Growth

Sky Light Holdings Limited has reduced its earnings per share by 17% a year over the last three years. Its revenue is down 23% over the previous year.

Few shareholders would be pleased to read that EPS have declined. And the impression is worse when you consider revenue is down year-on-year. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. 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 Sky Light Holdings Limited Been A Good Investment?

We think that the total shareholder return of 539%, over three years, would leave most Sky Light Holdings Limited shareholders smiling. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.

To Conclude...

Sky Light Holdings pays its CEO a majority of compensation through a salary. While the return to shareholders does look promising, it's hard to ignore the lack of earnings growth and this makes us wonder if these strong returns can continue. Shareholders might want to question the board about these concerns, and revisit their investment thesis for the company.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. We've identified 3 warning signs for Sky Light Holdings that investors should be aware of in a dynamic business environment.

Switching gears from Sky Light Holdings, 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.