Here's Why Shareholders Should Examine Shun Ho Holdings Limited's (HKG:253) CEO Compensation Package More Closely
Key Insights
- Shun Ho Holdings to hold its Annual General Meeting on 23rd of May
- Salary of HK$14.4m is part of CEO William Cheng's total remuneration
- The overall pay is 623% above the industry average
- Shun Ho Holdings' three-year loss to shareholders was 38% while its EPS was down 73% over the past three years
The results at Shun Ho Holdings Limited (HKG:253) have been quite disappointing recently and CEO William Cheng bears some responsibility for this. At the upcoming AGM on 23rd of May, shareholders can hear from the board including their plans for turning around performance. This will be also be a chance where they can challenge the board on company direction and vote on resolutions such as executive remuneration. We present the case why we think CEO compensation is out of sync with company performance.
Check out our latest analysis for Shun Ho Holdings
Comparing Shun Ho Holdings Limited's CEO Compensation With The Industry
At the time of writing, our data shows that Shun Ho Holdings Limited has a market capitalization of HK$133m, and reported total annual CEO compensation of HK$17m for the year to December 2024. There was no change in the compensation compared to last year. In particular, the salary of HK$14.4m, makes up a huge portion of the total compensation being paid to the CEO.
On comparing similar-sized companies in the Hong Kong Hospitality industry with market capitalizations below HK$1.6b, we found that the median total CEO compensation was HK$2.4m. Accordingly, our analysis reveals that Shun Ho Holdings Limited pays William Cheng north of the industry median. Furthermore, William Cheng directly owns HK$90m worth of shares in the company, implying that they are deeply invested in the company's success.
| Component | 2024 | 2023 | Proportion (2024) |
| Salary | HK$14m | HK$14m | 83% |
| Other | HK$3.0m | HK$3.0m | 17% |
| Total Compensation | HK$17m | HK$17m | 100% |
On an industry level, around 83% of total compensation represents salary and 17% is other remuneration. There isn't a significant difference between Shun Ho Holdings and the broader market, in terms of salary allocation in the overall compensation package. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.
Shun Ho Holdings Limited's Growth
Over the last three years, Shun Ho Holdings Limited has shrunk its earnings per share by 73% per year. Its revenue is up 13% over the last year.
The decline in EPS is a bit concerning. While the revenue growth is good to see, it is outweighed by the fact that EPS are down, over three years. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.
Has Shun Ho Holdings Limited Been A Good Investment?
The return of -38% over three years would not have pleased Shun Ho Holdings Limited shareholders. Therefore, it might be upsetting for shareholders if the CEO were paid generously.
In Summary...
Not only have shareholders not seen a favorable return on their investment, but the business hasn't performed well either. Few shareholders would be willing to award the CEO with a pay raise. At the upcoming AGM, the board will get the chance to explain the steps it plans to take to improve business performance.
While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. We did our research and spotted 1 warning sign for Shun Ho Holdings that investors should look into moving forward.
Switching gears from Shun Ho 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.
Valuation is complex, but we're here to simplify it.
Discover if Shun Ho Holdings might be undervalued or overvalued with our detailed analysis, featuring fair value estimates, potential risks, dividends, insider trades, and its financial condition.
Access Free AnalysisHave feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.