We Think Some Shareholders May Hesitate To Increase Shen You Holdings Limited's (HKG:8377) CEO Compensation

In the past three years, the share price of Shen You Holdings Limited (HKG:8377) has struggled to grow and now shareholders are sitting on a loss. Despite positive EPS growth in the past few years, the share price hasn't tracked the fundamental performance of the company. Shareholders may want to question the board on the future direction of the company at the upcoming AGM on 07 May 2021. Voting on resolutions such as executive remuneration and other matters could also be a way to influence management. Here's our take on why we think shareholders may want to be cautious of approving a raise for the CEO at the moment.

View our latest analysis for Shen You Holdings

How Does Total Compensation For Albert Wong Compare With Other Companies In The Industry?

At the time of writing, our data shows that Shen You Holdings Limited has a market capitalization of HK$156m, and reported total annual CEO compensation of HK$2.1m for the year to December 2020. That's a notable decrease of 22% on last year. In particular, the salary of HK$2.08m, makes up a huge portion of the total compensation being paid to the CEO.

On comparing similar-sized companies in the industry with market capitalizations below HK$1.6b, we found that the median total CEO compensation was HK$2.3m. So it looks like Shen You Holdings compensates Albert Wong in line with the median for the industry. Furthermore, Albert Wong directly owns HK$54m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2020	2019	Proportion (2020)
Salary	HK$2.1m	HK$2.7m	99%
Other	HK$18k	HK$18k	1%
Total Compensation	HK$2.1m	HK$2.7m	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. Shen You Holdings has gone down a largely traditional route, paying Albert Wong a high salary, giving it preference over non-salary benefits. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

Shen You Holdings Limited's Growth

Earnings per share at Shen You Holdings Limited are much the same as they were three years ago, albeit with slightly higher. In the last year, its revenue is down 23%.

We generally like to see a little revenue growth, but the modest improvement in EPS is good. In conclusion we can't form a strong opinion about business performance yet; but it's one worth watching. 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 Shen You Holdings Limited Been A Good Investment?

With a total shareholder return of -75% over three years, Shen You Holdings Limited shareholders would by and large be disappointed. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

To Conclude...

Shen You Holdings pays its CEO a majority of compensation through a salary. Shareholders have not seen their shares grow in value, rather they have seen their shares decline. A huge lag in share price growth when earnings have grown may indicate there could be other issues that are affecting the company at the moment that the market is focused on. Shareholders would probably be keen to find out what are the other factors could be weighing down the stock. The upcoming AGM will be a chance for shareholders to question the board on key matters, such as CEO remuneration or any other issues they might have and revisit their investment thesis with regards to the company.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. In our study, we found 5 warning signs for Shen You Holdings you should be aware of, and 3 of them are concerning.

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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