Here's Why Shareholders May Want To Be Cautious With Increasing Four Seas Mercantile Holdings Limited's (HKG:374) CEO Pay Packet

Key Insights

• Four Seas Mercantile Holdings' Annual General Meeting to take place on 29th of August
• Total pay for CEO Chun Kit Tai includes HK$3.22m salary
• The total compensation is 230% higher than the average for the industry
• Over the past three years, Four Seas Mercantile Holdings' EPS fell by 6.7% and over the past three years, the total shareholder return was 5.6%

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The share price of Four Seas Mercantile Holdings Limited (HKG:374) has been growing in the past few years, however, the per-share earnings growth has been lacking, suggesting something is amiss. Some of these issues will occupy shareholders' minds as the AGM rolls around on 29th of August. One way that shareholders can influence managerial decisions is through voting on CEO and executive remuneration packages, which studies show could impact company performance. From the data that we gathered, we think that shareholders should hold off on a raise on CEO compensation until performance starts to show some improvement.

Check out our latest analysis for Four Seas Mercantile Holdings

Comparing Four Seas Mercantile Holdings Limited's CEO Compensation With The Industry

According to our data, Four Seas Mercantile Holdings Limited has a market capitalization of HK$988m, and paid its CEO total annual compensation worth HK$3.3m over the year to March 2025. That's a notable decrease of 13% on last year. Notably, the salary which is HK$3.22m, represents most of the total compensation being paid.

For comparison, other companies in the Hong Kong Food industry with market capitalizations below HK$1.6b, reported a median total CEO compensation of HK$1.0m. Hence, we can conclude that Chun Kit Tai is remunerated higher than the industry median. Moreover, Chun Kit Tai also holds HK$30m worth of Four Seas Mercantile Holdings stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Speaking on an industry level, nearly 82% of total compensation represents salary, while the remainder of 18% is other remuneration. Four Seas Mercantile Holdings pays a high salary, concentrating more on this aspect of compensation in comparison to non-salary pay. 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 Four Seas Mercantile Holdings Limited's Growth Numbers

Over the last three years, Four Seas Mercantile Holdings Limited has shrunk its earnings per share by 6.7% per year. It saw its revenue drop 7.0% over the last year.

Few shareholders would be pleased to read that EPS have declined. 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 Four Seas Mercantile Holdings Limited Been A Good Investment?

With a total shareholder return of 5.6% over three years, Four Seas Mercantile Holdings Limited has done okay by shareholders, but there's always room for improvement. Accordingly, a proposal to increase CEO remuneration without seeing an improvement in shareholder returns might not be met favorably by most shareholders.

In Summary...

Four Seas Mercantile Holdings pays its CEO a majority of compensation through a salary. Despite the positive returns on shareholders' investments, the fact that earnings have failed to grow makes us skeptical about whether these returns will continue. In the upcoming AGM, shareholders will get the opportunity to discuss any concerns with the board, including those related to CEO remuneration and assess if the board's plan will likely improve performance in the future.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. That's why we did our research, and identified 2 warning signs for Four Seas Mercantile Holdings (of which 1 is a bit concerning!) that you should know about in order to have a holistic understanding of the stock.

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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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.