We Discuss Why East Buy Holding Limited's (HKG:1797) CEO May Deserve A Higher Pay Packet

Key Insights

• East Buy Holding's Annual General Meeting to take place on 3rd of November
• CEO Dongxu Sun's total compensation includes salary of CN¥906.0k
• Total compensation is 34% below industry average
• Over the past three years, East Buy Holding's EPS grew by 110% and over the past three years, the total shareholder return was 29%

The decent performance at East Buy Holding Limited (HKG:1797) recently will please most shareholders as they go into the AGM coming up on 3rd of November. The focus will probably be on the future strategic initiatives that the board and management will put in place to improve the business rather than executive remuneration when they cast their votes on company resolutions. We have prepared some analysis below and we show why we think CEO compensation looks decent with even the possibility for a raise.

Check out our latest analysis for East Buy Holding

Comparing East Buy Holding Limited's CEO Compensation With The Industry

Our data indicates that East Buy Holding Limited has a market capitalization of HK$33b, and total annual CEO compensation was reported as CN¥16m for the year to May 2023. We note that's an increase of 56% above last year. We think total compensation is more important but our data shows that the CEO salary is lower, at CN¥906k.

For comparison, other companies in the Hong Kong Consumer Services industry with market capitalizations ranging between HK$16b and HK$50b had a median total CEO compensation of CN¥25m. This suggests that Dongxu Sun is paid below the industry median. Furthermore, Dongxu Sun directly owns HK$108m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2023	2022	Proportion (2023)
Salary	CN¥906k	CN¥1.0m	6%
Other	CN¥15m	CN¥9.5m	94%
Total Compensation	CN¥16m	CN¥10m	100%

Talking in terms of the industry, salary represented approximately 85% of total compensation out of all the companies we analyzed, while other remuneration made up 15% of the pie. It's interesting to note that East Buy Holding allocates a smaller portion of compensation to salary in comparison to the broader industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

A Look at East Buy Holding Limited's Growth Numbers

East Buy Holding Limited has seen its earnings per share (EPS) increase by 110% a year over the past three years. Its revenue is up 651% over the last year.

This demonstrates that the company has been improving recently and is good news for the shareholders. Most shareholders would be pleased to see strong revenue growth combined with EPS growth. This combo suggests a fast growing business. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.

Has East Buy Holding Limited Been A Good Investment?

East Buy Holding Limited has served shareholders reasonably well, with a total return of 29% over three years. But they probably don't want to see the CEO paid more than is normal for companies around the same size.

To Conclude...

While the company seems to be headed in the right direction performance-wise, there's always room for improvement. If it manages to keep up the current streak, CEO remuneration could well be one of shareholders' least concerns. Instead, investors might be more interested in discussions that would help manage their longer-term growth expectations such as company business strategies and future growth potential.

CEO compensation can have a massive impact on performance, but it's just one element. We've identified 1 warning sign for East Buy Holding that investors should be aware of in a dynamic business environment.

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. 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.