Cool Link (Holdings) Limited's (HKG:8491) CEO Compensation Is Looking A Bit Stretched At The Moment

The underwhelming share price performance of Cool Link (Holdings) Limited (HKG:8491) in the past three years would have disappointed many shareholders. Despite positive EPS growth in the past few years, the share price hasn't tracked the fundamental performance of the company. These are some of the concerns that shareholders may want to bring up at the next AGM held on 29 June 2021. 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.

View our latest analysis for Cool Link (Holdings)

Comparing Cool Link (Holdings) Limited's CEO Compensation With the industry

Our data indicates that Cool Link (Holdings) Limited has a market capitalization of HK$40m, and total annual CEO compensation was reported as S$551k for the year to December 2020. That's a notable increase of 64% on last year. Notably, the salary which is S$512.0k, represents most of the total compensation being paid.

On comparing similar-sized companies in the industry with market capitalizations below HK$1.6b, we found that the median total CEO compensation was S$215k. This suggests that R Gay Gay is paid more than the median for the industry.

Component	2020	2019	Proportion (2020)
Salary	S$512k	S$299k	93%
Other	S$39k	S$36k	7%
Total Compensation	S$551k	S$335k	100%

On an industry level, around 91% of total compensation represents salary and 9% is other remuneration. Although there is a difference in how total compensation is set, Cool Link (Holdings) more or less reflects the market in terms of setting the salary. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

A Look at Cool Link (Holdings) Limited's Growth Numbers

Cool Link (Holdings) Limited has seen its earnings per share (EPS) increase by 8.0% a year over the past three years. Its revenue is up 13% over the last year.

We would argue that the modest growth in revenue is a notable positive. And the modest growth in EPS isn't bad, either. So while performance isn't amazing, we think it really does seem quite respectable. 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 Cool Link (Holdings) Limited Been A Good Investment?

Few Cool Link (Holdings) Limited shareholders would feel satisfied with the return of -94% over three years. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

Shareholders have not seen their shares grow in value, rather they have seen their shares decline. 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.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. That's why we did our research, and identified 5 warning signs for Cool Link (Holdings) (of which 2 are a bit concerning!) that you should know about in order to have a holistic understanding of the stock.

Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies that have HIGH return on equity and low debt.

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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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