It Looks Like Emperor Capital Group Limited's (HKG:717) CEO May Expect Their Salary To Be Put Under The Microscope

By
Simply Wall St
Published
February 18, 2022
SEHK:717
Source: Shutterstock

The results at Emperor Capital Group Limited (HKG:717) have been quite disappointing recently and CEO Daisy Yeung bears some responsibility for this. At the upcoming AGM on 25 February 2022, 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.

See our latest analysis for Emperor Capital Group

Comparing Emperor Capital Group Limited's CEO Compensation With the industry

Our data indicates that Emperor Capital Group Limited has a market capitalization of HK$499m, and total annual CEO compensation was reported as HK$1.9m for the year to September 2021. That's a modest increase of 5.5% on the prior year. Notably, the salary which is HK$1.57m, represents most of the total compensation being paid.

On comparing similar-sized companies in the industry with market capitalizations below HK$1.6b, we found that the median total CEO compensation was HK$2.1m. This suggests that Emperor Capital Group remunerates its CEO largely in line with the industry average. What's more, Daisy Yeung holds HK$1.3m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component20212020Proportion (2021)
Salary HK$1.6m HK$1.5m 84%
Other HK$288k HK$267k 16%
Total CompensationHK$1.9m HK$1.8m100%

On an industry level, around 75% of total compensation represents salary and 25% is other remuneration. Emperor Capital Group is paying a higher share of its remuneration through a salary in comparison to the overall industry. 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.

ceo-compensation
SEHK:717 CEO Compensation February 18th 2022

A Look at Emperor Capital Group Limited's Growth Numbers

Emperor Capital Group Limited has reduced its earnings per share by 80% a year over the last three years. Its revenue is down 32% over the previous year.

The decline in EPS is a bit concerning. This is compounded by the fact revenue is actually down on last year. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. 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 Emperor Capital Group Limited Been A Good Investment?

With a total shareholder return of -82% over three years, Emperor Capital Group Limited shareholders would by and large be disappointed. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

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, management will get a chance to explain how they plan to get the business back on track and address the concerns from investors.

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. That's why we did our research, and identified 3 warning signs for Emperor Capital Group (of which 1 can't be ignored!) that you should know about in order to have a holistic understanding of the stock.

Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.

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