Increases to Modern Dental Group Limited's (HKG:3600) CEO Compensation Might Cool off for now

Key Insights

• Modern Dental Group to hold its Annual General Meeting on 30th of May
• Total pay for CEO Godfrey Ngai includes HK$5.59m salary
• Total compensation is 40% above industry average
• Modern Dental Group's three-year loss to shareholders was 18% while its EPS grew by 56% over the past three years

The underwhelming share price performance of Modern Dental Group Limited (HKG:3600) in the past three years would have disappointed many shareholders. Despite positive EPS growth in the past few years, the share price hasn't tracked the fundamental performance of the company. These are some of the concerns that shareholders may want to bring up at the next AGM held on 30th of May. They could also try to influence management and firm direction through voting on resolutions such as executive remuneration and other company matters. We think shareholders might be reluctant to increase compensation for the CEO at the moment, according to our analysis below.

Check out our latest analysis for Modern Dental Group

How Does Total Compensation For Godfrey Ngai Compare With Other Companies In The Industry?

At the time of writing, our data shows that Modern Dental Group Limited has a market capitalization of HK$4.6b, and reported total annual CEO compensation of HK$5.6m for the year to December 2023. That's a modest increase of 7.8% on the prior year. Notably, the salary of HK$5.6m is the entirety of the CEO compensation.

On comparing similar companies from the Hong Kong Medical Equipment industry with market caps ranging from HK$1.6b to HK$6.2b, we found that the median CEO total compensation was HK$4.0m. Accordingly, our analysis reveals that Modern Dental Group Limited pays Godfrey Ngai north of the industry median. Furthermore, Godfrey Ngai directly owns HK$479m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2023	2022	Proportion (2023)
Salary	HK$5.6m	HK$5.2m	100%
Other	-	-	-
Total Compensation	HK$5.6m	HK$5.2m	100%

Speaking on an industry level, nearly 64% of total compensation represents salary, while the remainder of 36% is other remuneration. On a company level, Modern Dental Group prefers to reward its CEO through a salary, opting not to pay Godfrey Ngai through 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 Modern Dental Group Limited's Growth Numbers

Modern Dental Group Limited has seen its earnings per share (EPS) increase by 56% a year over the past three years. In the last year, its revenue is up 12%.

Shareholders would be glad to know that the company has improved itself over the last few years. This sort of respectable year-on-year revenue growth is often seen at a healthy, growing business. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.

Has Modern Dental Group Limited Been A Good Investment?

With a three year total loss of 18% for the shareholders, Modern Dental Group Limited would certainly have some dissatisfied shareholders. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

In Summary...

Modern Dental Group rewards its CEO solely through a salary, ignoring non-salary benefits completely. 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. 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.

While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. That's why we did some digging and identified 1 warning sign for Modern Dental Group that investors should think about before committing capital to this stock.

Important note: Modern Dental Group 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.