We Think Some Shareholders May Hesitate To Increase Medicskin Holdings Limited's (HKG:8307) CEO Compensation

Key Insights

• Medicskin Holdings to hold its Annual General Meeting on 22nd of September
• Total pay for CEO Kwok Leung Kong includes HK$4.22m salary
• Total compensation is 272% above industry average
• Over the past three years, Medicskin Holdings' EPS fell by 44% and over the past three years, the total shareholder return was 18%

The share price of Medicskin Holdings Limited (HKG:8307) has been growing in the past few years, however, the per-share earnings growth has been lacking, suggesting something is amiss. These concerns will be at the front of shareholders' minds as they go into the AGM coming up on 22nd of September. It would also be an opportunity for them to influence management through exercising their voting power on company resolutions, including CEO and executive remuneration, which could impact on firm performance in the future. From what we gathered, we think shareholders should be wary of raising CEO compensation until the company shows some marked improvement.

See our latest analysis for Medicskin Holdings

Comparing Medicskin Holdings Limited's CEO Compensation With The Industry

According to our data, Medicskin Holdings Limited has a market capitalization of HK$73m, and paid its CEO total annual compensation worth HK$6.2m over the year to March 2023. That's a fairly small increase of 4.0% over the previous year. In particular, the salary of HK$4.22m, makes up a huge portion of the total compensation being paid to the CEO.

On comparing similar-sized companies in the Hong Kong Healthcare industry with market capitalizations below HK$1.6b, we found that the median total CEO compensation was HK$1.7m. Accordingly, our analysis reveals that Medicskin Holdings Limited pays Kwok Leung Kong north of the industry median. What's more, Kwok Leung Kong holds HK$50m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component	2023	2022	Proportion (2023)
Salary	HK$4.2m	HK$4.6m	68%
Other	HK$2.0m	HK$1.4m	32%
Total Compensation	HK$6.2m	HK$6.0m	100%

On an industry level, around 80% of total compensation represents salary and 20% is other remuneration. Medicskin Holdings pays a modest slice of remuneration through salary, as compared to the broader industry. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

Medicskin Holdings Limited's Growth

Over the last three years, Medicskin Holdings Limited has shrunk its earnings per share by 44% per year. Its revenue is up 5.5% over the last year.

The decline in EPS is a bit concerning. The modest increase in revenue in the last year isn't enough to make us overlook the disappointing change in EPS. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. 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 Medicskin Holdings Limited Been A Good Investment?

Medicskin Holdings Limited has served shareholders reasonably well, with a total return of 18% over three years. But they would probably prefer not to see CEO compensation far in excess of the median.

In Summary...

While it's true that shareholders have owned decent returns, it's hard to overlook the lack of earnings growth and this makes us question whether these returns will continue. Shareholders should make the most of the coming opportunity to question the board on key concerns they may have and revisit their investment thesis with regards to the company.

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. In our study, we found 3 warning signs for Medicskin Holdings you should be aware of, and 2 of them shouldn't be ignored.

Switching gears from Medicskin Holdings, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.

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

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.