We Think Some Shareholders May Hesitate To Increase Asia Cassava Resources Holdings Limited's (HKG:841) CEO Compensation

Key Insights

• Asia Cassava Resources Holdings' Annual General Meeting to take place on 25th of September
• CEO Ming Chuan Chu's total compensation includes salary of HK$1.50m
• Total compensation is similar to the industry average
• Asia Cassava Resources Holdings' EPS grew by 14% over the past three years while total shareholder loss over the past three years was 24%

In the past three years, the share price of Asia Cassava Resources Holdings Limited (HKG:841) has struggled to grow and now shareholders are sitting on a loss. Despite positive EPS growth in the past few years, the share price hasn't tracked the fundamental performance of the company. Shareholders may want to question the board on the future direction of the company at the upcoming AGM on 25th of September. They could also influence management through voting on resolutions such as executive remuneration. We discuss below why we think shareholders should be cautious of approving a raise for the CEO at the moment.

Check out our latest analysis for Asia Cassava Resources Holdings

How Does Total Compensation For Ming Chuan Chu Compare With Other Companies In The Industry?

Our data indicates that Asia Cassava Resources Holdings Limited has a market capitalization of HK$99m, and total annual CEO compensation was reported as HK$1.5m for the year to March 2023. This was the same amount the CEO received in the prior year. Notably, the salary which is HK$1.50m, 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$1.5m. This suggests that Asia Cassava Resources Holdings remunerates its CEO largely in line with the industry average. Furthermore, Ming Chuan Chu directly owns HK$61m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2023	2022	Proportion (2023)
Salary	HK$1.5m	HK$1.5m	99%
Other	HK$18k	HK$18k	1%
Total Compensation	HK$1.5m	HK$1.5m	100%

On an industry level, roughly 70% of total compensation represents salary and 30% is other remuneration. Asia Cassava Resources Holdings is focused on going down a more traditional approach and is paying a higher portion of compensation through salary, as compared to non-salary benefits. 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.

A Look at Asia Cassava Resources Holdings Limited's Growth Numbers

Over the past three years, Asia Cassava Resources Holdings Limited has seen its earnings per share (EPS) grow by 14% per year. In the last year, its revenue is up 11%.

This demonstrates that the company has been improving recently and is good news for the shareholders. It's a real positive to see this sort of revenue growth in a single year. That suggests a healthy and growing business. 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 Asia Cassava Resources Holdings Limited Been A Good Investment?

Given the total shareholder loss of 24% over three years, many shareholders in Asia Cassava Resources Holdings Limited are probably rather dissatisfied, to say the least. So shareholders would probably want the company to be less generous with CEO compensation.

In Summary...

Ming Chuan receives almost all of their compensation through a salary. The fact that shareholders are sitting on a loss on the value of their shares in the past few years is certainly disconcerting. The stock's movement is disjointed with the company's earnings growth, which ideally should move in the same direction. Shareholders would be keen to know what's holding the stock back when earnings have grown. These concerns should be addressed at the upcoming AGM, where shareholders can question the board and evaluate if their judgement and decision making is still in line with their expectations.

CEO pay is simply one of the many factors that need to be considered while examining business performance. We identified 3 warning signs for Asia Cassava Resources Holdings (2 are a bit concerning!) that you should be aware of before investing here.

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.