We Think Fameglow Holdings Limited's (HKG:8603) CEO Compensation Looks Fair

Key Insights

• Fameglow Holdings will host its Annual General Meeting on 29th of September
• Total pay for CEO Chi Ching Fu includes HK$1.76m salary
• The overall pay is comparable to the industry average
• Fameglow Holdings' total shareholder return over the past three years was 283% while its EPS grew by 80% over the past three years

The performance at Fameglow Holdings Limited (HKG:8603) has been quite strong recently and CEO Chi Ching Fu has played a role in it. Shareholders will have this at the front of their minds in the upcoming AGM on 29th of September. This would also be a chance for them to hear the board review the financial results, discuss future company strategy and vote on any resolutions such as executive remuneration. Here is our take on why we think CEO compensation is not extravagant.

Check out our latest analysis for Fameglow Holdings

How Does Total Compensation For Chi Ching Fu Compare With Other Companies In The Industry?

Our data indicates that Fameglow Holdings Limited has a market capitalization of HK$552m, and total annual CEO compensation was reported as HK$1.8m for the year to March 2023. We note that's a decrease of 51% compared to last year. Notably, the salary which is HK$1.76m, represents most of the total compensation being paid.

For comparison, other companies in the Hong Kong Consumer Services industry with market capitalizations below HK$1.6b, reported a median total CEO compensation of HK$1.8m. From this we gather that Chi Ching Fu is paid around the median for CEOs in the industry.

Component	2023	2022	Proportion (2023)
Salary	HK$1.8m	HK$3.6m	99%
Other	HK$18k	HK$17k	1%
Total Compensation	HK$1.8m	HK$3.6m	100%

On an industry level, around 82% of total compensation represents salary and 18% is other remuneration. Fameglow Holdings pays a high salary, concentrating more on this aspect of compensation in comparison to non-salary pay. 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.

Fameglow Holdings Limited's Growth

Fameglow Holdings Limited's earnings per share (EPS) grew 80% per year over the last three years. In the last year, its revenue is up 41%.

This demonstrates that the company has been improving recently and is good news for the shareholders. The combination of strong revenue growth with medium-term EPS improvement certainly points to the kind of growth we like to see. While we don't have analyst forecasts for the company, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.

Has Fameglow Holdings Limited Been A Good Investment?

Most shareholders would probably be pleased with Fameglow Holdings Limited for providing a total return of 283% over three years. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.

To Conclude...

Fameglow Holdings pays its CEO a majority of compensation through a salary. Some shareholders will probably be more lenient on CEO compensation in the upcoming AGM given the pleasing performance of the company recently. Seeing that earnings growth and share price performance seems to be on the right path, the more pressing focus for shareholders at the AGM may be how the board and management plans to turn the company into a sustainably profitable one.

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 3 warning signs for Fameglow Holdings you should be aware of, and 1 of them makes us a bit uncomfortable.

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.

Have 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.