We Think Shareholders May Want To Consider A Review Of Continental Holdings Limited's (HKG:513) CEO Compensation Package

Continental Holdings Limited (HKG:513) has not performed well recently and CEO Shirley Cheng will probably need to up their game. At the upcoming AGM on 27 May 2021, shareholders can hear from the board including their plans for turning around performance. They will also get a chance to influence managerial decision-making through voting on resolutions such as executive remuneration, which may impact firm value in the future. The data we present below explains why we think CEO compensation is not consistent with recent performance.

Check out our latest analysis for Continental Holdings

Comparing Continental Holdings Limited's CEO Compensation With the industry

According to our data, Continental Holdings Limited has a market capitalization of HK$335m, and paid its CEO total annual compensation worth HK$2.6m over the year to June 2020. This was the same as last year. In particular, the salary of HK$2.28m, makes up a huge portion of the total compensation being paid to the CEO.

For comparison, other companies in the industry with market capitalizations below HK$1.6b, reported a median total CEO compensation of HK$2.3m. This suggests that Continental Holdings remunerates its CEO largely in line with the industry average.

Component	2020	2019	Proportion (2020)
Salary	HK$2.3m	HK$2.3m	89%
Other	HK$293k	HK$293k	11%
Total Compensation	HK$2.6m	HK$2.6m	100%

Talking in terms of the industry, salary represented approximately 93% of total compensation out of all the companies we analyzed, while other remuneration made up 7% of the pie. Continental Holdings is largely mirroring the industry average when it comes to the share a salary enjoys in overall compensation. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

A Look at Continental Holdings Limited's Growth Numbers

Continental Holdings Limited has reduced its earnings per share by 88% a year over the last three years. Its revenue is down 12% over the previous year.

Overall this is not a very positive result for shareholders. And the fact that revenue is down year on year arguably paints an ugly picture. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. 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 Continental Holdings Limited Been A Good Investment?

Few Continental Holdings Limited shareholders would feel satisfied with the return of -58% over three years. 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, they can question the management's plans and strategies to turn performance around and reassess their investment thesis in regards to the company.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. We've identified 2 warning signs for Continental Holdings that investors should be aware of in a dynamic business environment.

Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies that have HIGH return on equity and low debt.

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