We Discuss Why Winning Tower Group Holdings Limited's (HKG:8362) CEO Compensation May Be Closely Reviewed

Winning Tower Group Holdings Limited (HKG:8362) has not performed well recently and CEO Eldon Lai 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 10 May 2021. 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. The data we present below explains why we think CEO compensation is not consistent with recent performance.

View our latest analysis for Winning Tower Group Holdings

Comparing Winning Tower Group Holdings Limited's CEO Compensation With the industry

At the time of writing, our data shows that Winning Tower Group Holdings Limited has a market capitalization of HK$48m, and reported total annual CEO compensation of HK$1.4m for the year to December 2020. Notably, that's a decrease of 12% over the year before. We note that the salary portion, which stands at HK$1.40m constitutes the majority of total compensation received by 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$1.2m. This suggests that Winning Tower Group Holdings remunerates its CEO largely in line with the industry average.

Component	2020	2019	Proportion (2020)
Salary	HK$1.4m	HK$1.4m	98%
Other	HK$28k	HK$218k	2%
Total Compensation	HK$1.4m	HK$1.6m	100%

On an industry level, roughly 91% of total compensation represents salary and 9% is other remuneration. Investors will find it interesting that Winning Tower Group Holdings pays the bulk of its rewards through a traditional salary, instead of 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.

A Look at Winning Tower Group Holdings Limited's Growth Numbers

Over the last three years, Winning Tower Group Holdings Limited has shrunk its earnings per share by 61% per year. It saw its revenue drop 43% over the last year.

Overall this is not a very positive result for shareholders. This is compounded by the fact revenue is actually down on last year. These factors suggest that the business performance wouldn't really justify a high pay packet 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 Winning Tower Group Holdings Limited Been A Good Investment?

With a total shareholder return of -65% over three years, Winning Tower Group Holdings Limited shareholders would by and large be disappointed. So shareholders would probably want the company to be less generous with CEO compensation.

In Summary...

Winning Tower Group Holdings pays its CEO a majority of compensation through a salary. 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, they can question the management's plans and strategies to turn performance around and reassess their investment thesis in regards to the company.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. We've identified 2 warning signs for Winning Tower Group Holdings that investors should be aware of in a dynamic business environment.

Switching gears from Winning Tower Group Holdings, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.

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This article by Simply Wall St is general in nature. 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.
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