Shareholders Will Probably Hold Off On Increasing Medicskin Holdings Limited's (HKG:8307) CEO Compensation For The Time Being

In the past three years, shareholders of Medicskin Holdings Limited (HKG:8307) have seen a loss on their investment. 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 23 September 2021 could be an opportunity for shareholders to bring these concerns to the board's attention. They could also try to influence management and firm direction through voting on resolutions such as executive remuneration and other company matters. 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 Medicskin Holdings

How Does Total Compensation For Kwok Leung Kong Compare With Other Companies In The Industry?

At the time of writing, our data shows that Medicskin Holdings Limited has a market capitalization of HK$97m, and reported total annual CEO compensation of HK$4.7m for the year to March 2021. That's a notable decrease of 21% on last year. Notably, the salary which is HK$3.53m, 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 HK$2.0m. Hence, we can conclude that Kwok Leung Kong is remunerated higher than the industry median. What's more, Kwok Leung Kong holds HK$67m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component	2021	2020	Proportion (2021)
Salary	HK$3.5m	HK$3.1m	75%
Other	HK$1.2m	HK$2.9m	25%
Total Compensation	HK$4.7m	HK$6.0m	100%

On an industry level, around 86% of total compensation represents salary and 14% is other remuneration. Medicskin Holdings sets aside a smaller share of compensation for salary, in comparison to the overall industry. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

Medicskin Holdings Limited's Growth

Over the past three years, Medicskin Holdings Limited has seen its earnings per share (EPS) grow by 38% per year. Revenue was pretty flat on last year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. While it would be good to see revenue growth, profits matter more in the end. 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 Medicskin Holdings Limited Been A Good Investment?

With a three year total loss of 3.2% for the shareholders, Medicskin Holdings Limited would certainly have some dissatisfied shareholders. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

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 probably be keen to find out what are the other factors could be weighing down the stock. 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 compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. We identified 4 warning signs for Medicskin Holdings (1 can't be ignored!) 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.

If you’re looking to trade a wide range of investments, open an account with the lowest-cost* platform trusted by professionals, Interactive Brokers. Their clients from over 200 countries and territories trade stocks, options, futures, forex, bonds and funds worldwide from a single integrated account. Promoted

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.
^*Interactive Brokers Rated Lowest Cost Broker by StockBrokers.com Annual Online Review 2020

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.