We Discuss Why Continental Holdings Limited's (HKG:513) CEO Will Find It Hard To Get A Pay Rise From Shareholders This Year

Key Insights

• Continental Holdings to hold its Annual General Meeting on 12th of December
• Total pay for CEO Shirley Cheng includes HK$1.20m salary
• Total compensation is 42% below industry average
• Over the past three years, Continental Holdings' EPS fell by 78% and over the past three years, the total loss to shareholders 58%

The underwhelming performance at Continental Holdings Limited (HKG:513) recently has probably not pleased shareholders. There is an opportunity for shareholders to influence management to turn the performance around by voting on resolutions such as executive remuneration at the AGM coming up on 12th of December. We think most shareholders will probably pass the CEO compensation, based on what we gathered.

View our latest analysis for Continental Holdings

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

Our data indicates that Continental Holdings Limited has a market capitalization of HK$165m, and total annual CEO compensation was reported as HK$1.4m for the year to June 2023. There was no change in the compensation compared to last year. Notably, the salary which is HK$1.20m, represents most of the total compensation being paid.

For comparison, other companies in the Hong Kong Luxury industry with market capitalizations below HK$1.6b, reported a median total CEO compensation of HK$2.4m. This suggests that Shirley Cheng is paid below the industry median.

Component	2023	2022	Proportion (2023)
Salary	HK$1.2m	HK$1.2m	89%
Other	HK$154k	HK$154k	11%
Total Compensation	HK$1.4m	HK$1.4m	100%

On an industry level, roughly 89% of total compensation represents salary and 11% is other remuneration. There isn't a significant difference between Continental Holdings and the broader market, in terms of salary allocation in the overall compensation package. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.

Continental Holdings Limited's Growth

Over the last three years, Continental Holdings Limited has shrunk its earnings per share by 78% per year. In the last year, its revenue is down 25%.

The decline in EPS is a bit concerning. This is compounded by the fact revenue is actually down on last year. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. 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 Continental Holdings Limited Been A Good Investment?

Few Continental Holdings Limited shareholders would feel satisfied with the return of -58% over three years. So shareholders would probably want the company to be less generous with CEO compensation.

To Conclude...

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, they can question the management's plans and strategies to turn performance around and reassess their investment thesis in regards to the company.

CEO pay is simply one of the many factors that need to be considered while examining business performance. That's why we did our research, and identified 4 warning signs for Continental Holdings (of which 2 are significant!) that you should know about in order to have a holistic understanding of the stock.

Switching gears from Continental 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.