Here's Why Shareholders May Want To Be Cautious With Increasing Takbo Group Holdings Limited's (HKG:8436) CEO Pay Packet

Shareholders of Takbo Group Holdings Limited (HKG:8436) 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. These are some of the concerns that shareholders may want to bring up at the next AGM held on 10 May 2021. Voting on resolutions such as executive remuneration and other matters could also be a way to influence management. We think shareholders might be reluctant to increase compensation for the CEO at the moment, according to our analysis below.

View our latest analysis for Takbo Group Holdings

How Does Total Compensation For Naam Or Compare With Other Companies In The Industry?

Our data indicates that Takbo Group Holdings Limited has a market capitalization of HK$104m, and total annual CEO compensation was reported as HK$4.2m for the year to December 2020. We note that's an increase of 30% above last year. While we always look at total compensation first, our analysis shows that the salary component is less, at HK$1.2m.

In comparison with other companies in the industry with market capitalizations under HK$1.6b, the reported median total CEO compensation was HK$1.9m. Hence, we can conclude that Naam Or is remunerated higher than the industry median.

Component	2020	2019	Proportion (2020)
Salary	HK$1.2m	HK$1.2m	29%
Other	HK$3.0m	HK$2.0m	71%
Total Compensation	HK$4.2m	HK$3.2m	100%

Talking in terms of the industry, salary represented approximately 79% of total compensation out of all the companies we analyzed, while other remuneration made up 21% of the pie. Takbo Group Holdings pays a modest slice of remuneration through salary, as compared to the broader industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

A Look at Takbo Group Holdings Limited's Growth Numbers

Over the past three years, Takbo Group Holdings Limited has seen its earnings per share (EPS) grow by 39% per year. In the last year, its revenue is up 8.1%.

Shareholders would be glad to know that the company has improved itself over the last few years. It's also good to see modest revenue growth, suggesting the underlying business is healthy. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Takbo Group Holdings Limited Been A Good Investment?

Few Takbo Group Holdings Limited shareholders would feel satisfied with the return of -58% over three years. So shareholders would probably want the company to be less generous with CEO compensation.

To Conclude...

Shareholders have not seen their shares grow in value, rather they have seen their shares decline. A huge lag in share price growth when earnings have grown may indicate there could be other issues that are affecting the company at the moment that the market is focused on. 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 compensation can have a massive impact on performance, but it's just one element. We've identified 3 warning signs for Takbo Group Holdings that investors should be aware of in a dynamic business environment.

Switching gears from Takbo Group 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.

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This article by Simply Wall St is general in nature. 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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