Shareholders May Be A Bit More Conservative With Heng Tai Consumables Group Limited's (HKG:197) CEO Compensation For Now

Key Insights

• Heng Tai Consumables Group will host its Annual General Meeting on 9th of December
• Total pay for CEO Kwok Hing Lam includes HK$2.84m salary
• Total compensation is similar to the industry average
• Over the past three years, Heng Tai Consumables Group's EPS grew by 32% and over the past three years, the total loss to shareholders 91%

Shareholders of Heng Tai Consumables Group Limited (HKG:197) will have been dismayed by the negative share price return over the last three years. However, what is unusual is that EPS growth has been positive, suggesting that the share price has diverged from fundamentals. These are some of the concerns that shareholders may want to bring up at the next AGM held on 9th of December. 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 Heng Tai Consumables Group

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

Our data indicates that Heng Tai Consumables Group Limited has a market capitalization of HK$43m, and total annual CEO compensation was reported as HK$3.1m for the year to June 2024. There was no change in the compensation compared to last year. In particular, the salary of HK$2.84m, makes up a huge portion of the total compensation being paid to the CEO.

For comparison, other companies in the Hong Kong Consumer Retailing industry with market capitalizations below HK$1.6b, reported a median total CEO compensation of HK$2.6m. So it looks like Heng Tai Consumables Group compensates Kwok Hing Lam in line with the median for the industry. What's more, Kwok Hing Lam holds HK$7.3m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component	2024	2023	Proportion (2024)
Salary	HK$2.8m	HK$2.8m	92%
Other	HK$236k	HK$236k	8%
Total Compensation	HK$3.1m	HK$3.1m	100%

Speaking on an industry level, nearly 67% of total compensation represents salary, while the remainder of 33% is other remuneration. Heng Tai Consumables Group is paying a higher share of its remuneration through a salary in comparison to the overall industry. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

A Look at Heng Tai Consumables Group Limited's Growth Numbers

Heng Tai Consumables Group Limited has seen its earnings per share (EPS) increase by 32% a year over the past three years. In the last year, its revenue changed by just 0.3%.

This demonstrates that the company has been improving recently and is good news for the shareholders. It's nice to see revenue heading northwards, as this is consistent with healthy business conditions. 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 Heng Tai Consumables Group Limited Been A Good Investment?

Few Heng Tai Consumables Group Limited shareholders would feel satisfied with the return of -91% over three years. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

To Conclude...

Despite the growth in its earnings, the share price decline in the past three years is certainly concerning. The stock's movement is disjointed with the company's earnings growth, which ideally should move in the same direction. Shareholders would probably be keen to find out what are the other factors could be weighing down the stock. At the upcoming AGM, shareholders will get the opportunity to discuss any issues with the board, including those related to CEO remuneration and assess if the board's plan will likely improve performance in the future.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. That's why we did some digging and identified 3 warning signs for Heng Tai Consumables Group that investors should think about before committing capital to this stock.

Important note: Heng Tai Consumables Group 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.