Shareholders May Be Wary Of Increasing Gudou Holdings Limited's (HKG:8308) CEO Compensation Package

Shareholders will probably not be too impressed with the underwhelming results at Gudou Holdings Limited (HKG:8308) recently. Shareholders can take the chance to hold the board and management accountable for the unsatisfactory performance at the next AGM on 14 May 2021. It would also be an opportunity for shareholders to influence management through voting on company resolutions such as executive remuneration, which could impact the firm significantly. The data we present below explains why we think CEO compensation is not consistent with recent performance.

Check out our latest analysis for Gudou Holdings

How Does Total Compensation For Chi Ming Hon Compare With Other Companies In The Industry?

At the time of writing, our data shows that Gudou Holdings Limited has a market capitalization of HK$500m, and reported total annual CEO compensation of CN¥1.6m for the year to December 2020. Notably, that's a decrease of 11% over the year before. We note that the salary portion, which stands at CN¥1.52m constitutes the majority of total compensation received by the CEO.

For comparison, other companies in the industry with market capitalizations below HK$1.6b, reported a median total CEO compensation of CN¥1.6m. So it looks like Gudou Holdings compensates Chi Ming Hon in line with the median for the industry. Furthermore, Chi Ming Hon directly owns HK$172m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2020	2019	Proportion (2020)
Salary	CN¥1.5m	CN¥1.6m	92%
Other	CN¥129k	CN¥234k	8%
Total Compensation	CN¥1.6m	CN¥1.9m	100%

On an industry level, roughly 87% of total compensation represents salary and 13% is other remuneration. Although there is a difference in how total compensation is set, Gudou 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.

Gudou Holdings Limited's Growth

Gudou Holdings Limited has reduced its earnings per share by 62% a year over the last three years. Its revenue is down 47% 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. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. 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 Gudou Holdings Limited Been A Good Investment?

The return of -70% over three years would not have pleased Gudou Holdings Limited shareholders. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

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, they can question the management's plans and strategies to turn performance around and reassess their investment thesis in regards to the company.

CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. We did our research and identified 5 warning signs (and 1 which is potentially serious) in Gudou Holdings we think you should know about.

Important note: Gudou 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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