This Is Why We Think Simplicity Holding Limited's (HKG:8367) CEO Might Get A Pay Rise Approved By Shareholders

Shareholders will be pleased by the robust performance of Simplicity Holding Limited (HKG:8367) recently and this will be kept in mind in the upcoming AGM on 06 August 2021. 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. Here is our take on why we think CEO compensation is fair and may even warrant a raise.

View our latest analysis for Simplicity Holding

How Does Total Compensation For Peony Wong Compare With Other Companies In The Industry?

At the time of writing, our data shows that Simplicity Holding Limited has a market capitalization of HK$1.4b, and reported total annual CEO compensation of HK$438k for the year to March 2021. That's a notable decrease of 8.6% on last year. Notably, the salary which is HK$405.0k, represents most of the total compensation being paid.

On examining similar-sized companies in the industry with market capitalizations between HK$777m and HK$3.1b, we discovered that the median CEO total compensation of that group was HK$1.9m. This suggests that Peony Wong is paid below the industry median.

Component	2021	2020	Proportion (2021)
Salary	HK$405k	HK$424k	92%
Other	HK$33k	HK$55k	8%
Total Compensation	HK$438k	HK$479k	100%

On an industry level, roughly 90% of total compensation represents salary and 10% is other remuneration. Simplicity Holding is largely mirroring the industry average when it comes to the share a salary enjoys in overall compensation. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

A Look at Simplicity Holding Limited's Growth Numbers

Simplicity Holding Limited's earnings per share (EPS) grew 4.4% per year over the last three years. In the last year, its revenue is down 16%.

We would argue that the lack of revenue growth in the last year is less than ideal, but it is good to see a modest EPS growth at least. It's hard to reach a conclusion about business performance right now. This may be one to watch. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Simplicity Holding Limited Been A Good Investment?

Most shareholders would probably be pleased with Simplicity Holding Limited for providing a total return of 1,108% over three years. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

To Conclude...

While the company seems to be headed in the right direction performance-wise, there's always room for improvement. If it continues on the same road, shareholders might feel even more confident about their investment, and have little to no objections concerning CEO pay. In fact, strategic decisions that could impact the future of the business might be a far more interesting topic for investors as it would help them set their longer-term expectations.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. We did our research and spotted 4 warning signs for Simplicity Holding that investors should look into moving forward.

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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