Increases to Eggriculture Foods Ltd.'s (HKG:8609) CEO Compensation Might Cool off for now

Shareholders of Eggriculture Foods Ltd. (HKG:8609) will have been dismayed by the negative share price return over the last three years. What is concerning is that despite positive EPS growth, the share price has not tracked the trend in fundamentals. The AGM coming up on the 16 September 2021 could be an opportunity for shareholders to bring these concerns to the board's attention. They could also influence management through voting on resolutions such as executive remuneration. Here's our take on why we think shareholders may want to be cautious of approving a raise for the CEO at the moment.

View our latest analysis for Eggriculture Foods

Comparing Eggriculture Foods Ltd.'s CEO Compensation With the industry

At the time of writing, our data shows that Eggriculture Foods Ltd. has a market capitalization of HK$168m, and reported total annual CEO compensation of S$472k for the year to March 2021. We note that's an increase of 67% above last year. Notably, the salary which is S$354.0k, represents most of the total compensation being paid.

In comparison with other companies in the industry with market capitalizations under HK$1.6b, the reported median total CEO compensation was S$351k. This suggests that Chin Chew Ma is paid more than the median for the industry. Furthermore, Chin Chew Ma directly owns HK$99m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2021	2020	Proportion (2021)
Salary	S$354k	S$210k	75%
Other	S$118k	S$73k	25%
Total Compensation	S$472k	S$283k	100%

On an industry level, roughly 79% of total compensation represents salary and 21% is other remuneration. Our data reveals that Eggriculture Foods allocates salary more or less in line with the wider market. 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 Eggriculture Foods Ltd.'s Growth Numbers

Eggriculture Foods Ltd.'s earnings per share (EPS) grew 299% per year over the last three years. Its revenue is up 18% over the last year.

This demonstrates that the company has been improving recently and is good news for the shareholders. It's also good to see decent revenue growth in the last year, suggesting the business is healthy and growing. 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 Eggriculture Foods Ltd. Been A Good Investment?

With a three year total loss of 23% for the shareholders, Eggriculture Foods Ltd. would certainly have some dissatisfied shareholders. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

In Summary...

Despite the growth in its earnings, the share price decline in the past three years is certainly concerning. The fact that the stock price hasn't grown along with earnings may indicate that other issues may be affecting that stock. Shareholders would be keen to know what's holding the stock back when earnings have grown. At the upcoming AGM, shareholders will get the opportunity to discuss any issues with the board, including those related to CEO remuneration and assess if the board's plan will likely improve performance in the future.

CEO compensation can have a massive impact on performance, but it's just one element. We did our research and spotted 2 warning signs for Eggriculture Foods that investors should look into moving forward.

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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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.
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