Shareholders May Be More Conservative With CEC International Holdings Limited's (HKG:759) CEO Compensation For Now

Key Insights

• CEC International Holdings to hold its Annual General Meeting on 29th of September
• CEO Fung Kwan Tang's total compensation includes salary of HK$5.29m
• The total compensation is 253% higher than the average for the industry
• Over the past three years, CEC International Holdings' EPS grew by 59% and over the past three years, the total loss to shareholders 43%

Shareholders of CEC International Holdings Limited (HKG:759) will have been dismayed by the negative share price return over the last three years. Despite positive EPS growth in the past few years, the share price hasn't tracked the fundamental performance of the company. The AGM coming up on the 29th of September could be an opportunity for shareholders to bring these concerns to the board's attention. They could also try to influence management and firm direction through voting on resolutions such as executive remuneration and other company matters. Here's our take on why we think shareholders may want to be cautious of approving a raise for the CEO at the moment.

See our latest analysis for CEC International Holdings

How Does Total Compensation For Fung Kwan Tang Compare With Other Companies In The Industry?

According to our data, CEC International Holdings Limited has a market capitalization of HK$236m, and paid its CEO total annual compensation worth HK$7.2m over the year to April 2023. Notably, that's an increase of 11% over the year before. In particular, the salary of HK$5.29m, 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$2.0m. Accordingly, our analysis reveals that CEC International Holdings Limited pays Fung Kwan Tang north of the industry median. What's more, Fung Kwan Tang holds HK$1.5m worth of shares in the company in their own name.

Component	2023	2022	Proportion (2023)
Salary	HK$5.3m	HK$4.8m	73%
Other	HK$1.9m	HK$1.7m	27%
Total Compensation	HK$7.2m	HK$6.5m	100%

On an industry level, around 76% of total compensation represents salary and 24% is other remuneration. CEC International Holdings is largely mirroring the industry average when it comes to the share a salary enjoys in overall compensation. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

CEC International Holdings Limited's Growth

CEC International Holdings Limited has seen its earnings per share (EPS) increase by 59% a year over the past three years. Its revenue is down 16% over the previous year.

Shareholders would be glad to know that the company has improved itself over the last few years. The lack of revenue growth isn't ideal, but it is the bottom line that counts most in business. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has CEC International Holdings Limited Been A Good Investment?

Few CEC International Holdings Limited shareholders would feel satisfied with the return of -43% over three years. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

To Conclude...

The fact that shareholders are sitting on a loss on the value of their shares in the past few years is certainly disconcerting. 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. 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.

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 2 warning signs for CEC International Holdings that investors should think about before committing capital to this stock.

Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.