Should Shareholders Reconsider CEC International Holdings Limited's (HKG:759) CEO Compensation Package?

Key Insights

• CEC International Holdings will host its Annual General Meeting on 26th of September
• Total pay for CEO Fung Kwan Tang includes HK$5.28m salary
• The total compensation is 113% higher than the average for the industry
• CEC International Holdings' three-year loss to shareholders was 77% while its EPS was down 39% over the past three years

CEC International Holdings Limited (HKG:759) has not performed well recently and CEO Fung Kwan Tang will probably need to up their game. Shareholders can take the chance to hold the board and management accountable for the unsatisfactory performance at the next AGM on 26th of September. They will also get a chance to influence managerial decision-making through voting on resolutions such as executive remuneration, which may impact firm value in the future. From our analysis, we think CEO compensation may need a review in light of the recent performance.

View our latest analysis for CEC International Holdings

Comparing CEC International Holdings Limited's CEO Compensation With The Industry

At the time of writing, our data shows that CEC International Holdings Limited has a market capitalization of HK$101m, and reported total annual CEO compensation of HK$5.7m for the year to April 2024. That's a notable decrease of 21% on last year. We note that the salary portion, which stands at HK$5.28m constitutes the majority of total compensation received by 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$2.7m. Hence, we can conclude that Fung Kwan Tang is remunerated higher than the industry median. Furthermore, Fung Kwan Tang directly owns HK$633k worth of shares in the company.

Component	2024	2023	Proportion (2024)
Salary	HK$5.3m	HK$5.3m	92%
Other	HK$442k	HK$1.9m	8%
Total Compensation	HK$5.7m	HK$7.2m	100%

On an industry level, around 67% of total compensation represents salary and 33% is other remuneration. It's interesting to note that CEC International Holdings pays out a greater portion of remuneration through salary, compared to the industry. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

A Look at CEC International Holdings Limited's Growth Numbers

CEC International Holdings Limited has reduced its earnings per share by 39% a year over the last three years. In the last year, its revenue is down 13%.

Overall this is not a very positive result for shareholders. And the impression is worse when you consider revenue is down year-on-year. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. While we don't have analyst forecasts for the company, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.

Has CEC International Holdings Limited Been A Good Investment?

The return of -77% over three years would not have pleased CEC International Holdings Limited shareholders. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

In Summary...

Along with the business performing poorly, shareholders have suffered with poor share price returns on their investments, suggesting that there's little to no chance of them being in favor of a CEO pay raise. At the upcoming AGM, management will get a chance to explain how they plan to get the business back on track and address the concerns from investors.

CEO compensation can have a massive impact on performance, but it's just one element. That's why we did some digging and identified 1 warning sign 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.

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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.