We Discuss Why Alltronics Holdings Limited's (HKG:833) CEO Compensation May Be Closely Reviewed

Key Insights

• Alltronics Holdings will host its Annual General Meeting on 29th of May
• Salary of HK$4.24m is part of CEO Eric Lam's total remuneration
• Total compensation is 290% above industry average
• Over the past three years, Alltronics Holdings' EPS fell by 3.1% and over the past three years, the total loss to shareholders 7.5%

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Shareholders will probably not be too impressed with the underwhelming results at Alltronics Holdings Limited (HKG:833) recently. Shareholders can take the chance to hold the board and management accountable for the unsatisfactory performance at the next AGM on 29th of May. 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.

Check out our latest analysis for Alltronics Holdings

How Does Total Compensation For Eric Lam Compare With Other Companies In The Industry?

At the time of writing, our data shows that Alltronics Holdings Limited has a market capitalization of HK$199m, and reported total annual CEO compensation of HK$9.3m for the year to December 2024. Notably, that's a decrease of 11% over the year before. While we always look at total compensation first, our analysis shows that the salary component is less, at HK$4.2m.

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$2.4m. Hence, we can conclude that Eric Lam is remunerated higher than the industry median. Moreover, Eric Lam also holds HK$634k worth of Alltronics Holdings stock directly under their own name.

Speaking on an industry level, nearly 78% of total compensation represents salary, while the remainder of 22% is other remuneration. It's interesting to note that Alltronics Holdings allocates a smaller portion of compensation to salary in comparison to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

A Look at Alltronics Holdings Limited's Growth Numbers

Over the last three years, Alltronics Holdings Limited has shrunk its earnings per share by 3.1% per year. It saw its revenue drop 21% over the last 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. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Alltronics Holdings Limited Been A Good Investment?

Given the total shareholder loss of 7.5% over three years, many shareholders in Alltronics Holdings Limited are probably rather dissatisfied, to say the least. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

Not only have shareholders not seen a favorable return on their investment, but the business hasn't performed well either. Few shareholders would be willing to award the CEO with a pay raise. At the upcoming AGM, the board will get the chance to explain the steps it plans to take to improve business performance.

CEO compensation can have a massive impact on performance, but it's just one element. That's why we did some digging and identified 2 warning signs for Alltronics Holdings that investors should think about before committing capital to this stock.

Important note: Alltronics Holdings is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.

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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.