Should Shareholders Reconsider Tungtex (Holdings) Company Limited's (HKG:518) CEO Compensation Package?

Key Insights

• Tungtex (Holdings)'s Annual General Meeting to take place on 26th of August
• Salary of HK$2.21m is part of CEO Raymond Tung's total remuneration
• The overall pay is 45% above the industry average
• Tungtex (Holdings)'s EPS declined by 106% over the past three years while total shareholder loss over the past three years was 50%

Shareholders will probably not be too impressed with the underwhelming results at Tungtex (Holdings) Company Limited (HKG:518) recently. Shareholders will be interested in what the board will have to say about turning performance around at the next AGM on 26th of August. It would also be an opportunity for shareholders to influence management through voting on company resolutions such as executive remuneration, which could impact the firm significantly. We present the case why we think CEO compensation is out of sync with company performance.

View our latest analysis for Tungtex (Holdings)

How Does Total Compensation For Raymond Tung Compare With Other Companies In The Industry?

At the time of writing, our data shows that Tungtex (Holdings) Company Limited has a market capitalization of HK$82m, and reported total annual CEO compensation of HK$2.7m for the year to March 2024. There was no change in the compensation compared to last year. Notably, the salary which is HK$2.21m, represents most of the total compensation being paid.

In comparison with other companies in the Hong Kong Luxury industry with market capitalizations under HK$1.6b, the reported median total CEO compensation was HK$1.9m. Hence, we can conclude that Raymond Tung is remunerated higher than the industry median.

Component	2024	2023	Proportion (2024)
Salary	HK$2.2m	HK$2.2m	80%
Other	HK$536k	HK$536k	20%
Total Compensation	HK$2.7m	HK$2.7m	100%

Speaking on an industry level, nearly 91% of total compensation represents salary, while the remainder of 9% is other remuneration. Tungtex (Holdings) pays a modest slice of remuneration through salary, as compared to the broader industry. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

Tungtex (Holdings) Company Limited's Growth

Over the last three years, Tungtex (Holdings) Company Limited has shrunk its earnings per share by 106% per year. In the last year, its revenue is down 31%.

Few shareholders would be pleased to read that EPS have declined. 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. 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 Tungtex (Holdings) Company Limited Been A Good Investment?

Few Tungtex (Holdings) Company Limited shareholders would feel satisfied with the return of -50% 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, management will get a chance to explain how they plan to get the business back on track and address the concerns from investors.

While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. That's why we did some digging and identified 1 warning sign for Tungtex (Holdings) that investors should think about before committing capital to this stock.

Switching gears from Tungtex (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.