Shareholders May Be Wary Of Increasing Cool Link (Holdings) Limited's (HKG:8491) CEO Compensation Package

Key Insights

• Cool Link (Holdings) will host its Annual General Meeting on 27th of June
• CEO R Gay Gay's total compensation includes salary of S$264.0k
• The total compensation is 107% higher than the average for the industry
• Over the past three years, Cool Link (Holdings)'s EPS fell by 65% and over the past three years, the total loss to shareholders 45%

The results at Cool Link (Holdings) Limited (HKG:8491) have been quite disappointing recently and CEO R Gay Gay bears some responsibility for this. Shareholders will be interested in what the board will have to say about turning performance around at the next AGM on 27th of June. 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. We present the case why we think CEO compensation is out of sync with company performance.

Check out our latest analysis for Cool Link (Holdings)

Comparing Cool Link (Holdings) Limited's CEO Compensation With The Industry

According to our data, Cool Link (Holdings) Limited has a market capitalization of HK$175m, and paid its CEO total annual compensation worth S$746k over the year to December 2023. We note that's a decrease of 8.4% compared to last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at S$264k.

On comparing similar-sized companies in the Hong Kong Consumer Retailing industry with market capitalizations below HK$1.6b, we found that the median total CEO compensation was S$360k. This suggests that R Gay Gay is paid more than the median for the industry. What's more, R Gay Gay holds HK$5.8m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component	2023	2022	Proportion (2023)
Salary	S$264k	S$240k	35%
Other	S$482k	S$574k	65%
Total Compensation	S$746k	S$814k	100%

On an industry level, around 73% of total compensation represents salary and 27% is other remuneration. Cool Link (Holdings) sets aside a smaller share of compensation for salary, in comparison to the overall industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

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

Over the last three years, Cool Link (Holdings) Limited has shrunk its earnings per share by 65% per year. Its revenue is down 11% over the previous 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. Although we don't have analyst forecasts, you might want to assess this data-rich visualization 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 -45% over three years. So shareholders would probably want the company to be less generous with CEO compensation.

In Summary...

Given that shareholders haven't seen any positive returns on their investment, not to mention the lack of earnings growth, this may suggest that few of them would be willing to award the CEO with a pay rise. At the upcoming AGM, the board will get the chance to explain the steps it plans to take to improve business performance.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. In our study, we found 4 warning signs for Cool Link (Holdings) you should be aware of, and 2 of them are a bit unpleasant.

Important note: Cool Link (Holdings) 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.

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