Most Shareholders Will Probably Find That The CEO Compensation For ST International Holdings Company Limited (HKG:8521) Is Reasonable

Key Insights

• ST International Holdings will host its Annual General Meeting on 31st of May
• CEO Bin Xi's total compensation includes salary of HK$1.47m
• The total compensation is similar to the average for the industry
• Over the past three years, ST International Holdings' EPS fell by 33% and over the past three years, the total shareholder return was 154%

Despite strong share price growth of 154% for ST International Holdings Company Limited (HKG:8521) over the last few years, earnings growth has been disappointing, which suggests something is amiss. The upcoming AGM on 31st of May may be an opportunity for shareholders to bring up any concerns they may have for the board’s attention. One way that shareholders can influence managerial decisions is through voting on CEO and executive remuneration packages, which studies show could impact company performance. From what we gathered, we think shareholders should be wary of raising CEO compensation until the company shows some marked improvement.

Check out our latest analysis for ST International Holdings

How Does Total Compensation For Bin Xi Compare With Other Companies In The Industry?

According to our data, ST International Holdings Company Limited has a market capitalization of HK$265m, and paid its CEO total annual compensation worth HK$1.5m over the year to December 2023. That is, the compensation was roughly the same as last year. We note that the salary portion, which stands at HK$1.47m constitutes the majority of total compensation received by the CEO.

On comparing similar-sized companies in the Hong Kong Luxury industry with market capitalizations below HK$1.6b, we found that the median total CEO compensation was HK$1.9m. This suggests that ST International Holdings remunerates its CEO largely in line with the industry average.

Component	2023	2022	Proportion (2023)
Salary	HK$1.5m	HK$1.5m	98%
Other	HK$37k	HK$36k	2%
Total Compensation	HK$1.5m	HK$1.5m	100%

Talking in terms of the industry, salary represented approximately 94% of total compensation out of all the companies we analyzed, while other remuneration made up 6% of the pie. Investors will find it interesting that ST International Holdings pays the bulk of its rewards through a traditional salary, instead of non-salary benefits. 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.

ST International Holdings Company Limited's Growth

ST International Holdings Company Limited has reduced its earnings per share by 33% a year over the last three years. It achieved revenue growth of 8.8% over the last year.

Few shareholders would be pleased to read that EPS have declined. The fairly low revenue growth fails to impress given that the EPS is down. 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 ST International Holdings Company Limited Been A Good Investment?

We think that the total shareholder return of 154%, over three years, would leave most ST International Holdings Company Limited shareholders smiling. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.

In Summary...

ST International Holdings pays its CEO a majority of compensation through a salary. While the return to shareholders does look promising, it's hard to ignore the lack of earnings growth and this makes us question whether these strong returns will continue. Shareholders should make the most of the coming opportunity to question the board on key concerns they may 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. We did our research and identified 4 warning signs (and 1 which is potentially serious) in ST International Holdings we think you should know about.

Important note: ST International 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.