Here's Why Shareholders Should Examine Sunwah Kingsway Capital Holdings Limited's (HKG:188) CEO Compensation Package More Closely

Shareholders will probably not be too impressed with the underwhelming results at Sunwah Kingsway Capital Holdings Limited (HKG:188) recently. At the upcoming AGM on 25 November 2022, shareholders can hear from the board including their plans for turning around performance. 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 Sunwah Kingsway Capital Holdings

Comparing Sunwah Kingsway Capital Holdings Limited's CEO Compensation With The Industry

At the time of writing, our data shows that Sunwah Kingsway Capital Holdings Limited has a market capitalization of HK$219m, and reported total annual CEO compensation of HK$2.4m for the year to June 2022. We note that's a decrease of 26% compared to last year. We note that the salary portion, which stands at HK$2.28m constitutes the majority of total compensation received by the CEO.

In comparison with other companies in the industry with market capitalizations under HK$1.6b, the reported median total CEO compensation was HK$1.9m. So it looks like Sunwah Kingsway Capital Holdings compensates Michael Choi in line with the median for the industry. Moreover, Michael Choi also holds HK$16m worth of Sunwah Kingsway Capital Holdings stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component	2022	2021	Proportion (2022)
Salary	HK$2.3m	HK$2.3m	97%
Other	HK$78k	HK$922k	3%
Total Compensation	HK$2.4m	HK$3.2m	100%

On an industry level, around 86% of total compensation represents salary and 14% is other remuneration. Investors will find it interesting that Sunwah Kingsway Capital Holdings pays the bulk of its rewards through a traditional salary, instead of non-salary benefits. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

A Look at Sunwah Kingsway Capital Holdings Limited's Growth Numbers

Over the last three years, Sunwah Kingsway Capital Holdings Limited has shrunk its earnings per share by 1.0% per year. In the last year, its revenue is down 74%.

A lack of EPS improvement is not good to see. And the impression is worse when you consider revenue is down year-on-year. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Sunwah Kingsway Capital Holdings Limited Been A Good Investment?

Given the total shareholder loss of 29% over three years, many shareholders in Sunwah Kingsway Capital Holdings Limited are probably rather dissatisfied, to say the least. So shareholders would probably want the company to be less generous with CEO compensation.

To Conclude...

Michael receives almost all of their compensation through a salary. Along with the business performing poorly, shareholders have suffered with poor share price returns on their investments, suggesting that there's little to no chance of them being in favor of a CEO pay raise. At the upcoming AGM, the board will get the chance to explain the steps it plans to take to improve business performance.

CEO pay is simply one of the many factors that need to be considered while examining business performance. That's why we did our research, and identified 3 warning signs for Sunwah Kingsway Capital Holdings (of which 1 is a bit concerning!) that you should know about in order to have a holistic understanding of the stock.

Important note: Sunwah Kingsway Capital 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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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.