Should Shareholders Reconsider CPM Group Limited's (HKG:1932) CEO Compensation Package?

Key Insights

• CPM Group to hold its Annual General Meeting on 4th of June
• Salary of HK$5.64m is part of CEO Philip Tsui's total remuneration
• The overall pay is 377% above the industry average
• Over the past three years, CPM Group's EPS fell by 40% and over the past three years, the total loss to shareholders 39%

The results at CPM Group Limited (HKG:1932) have been quite disappointing recently and CEO Philip Tsui bears some responsibility for this. At the upcoming AGM on 4th of June, shareholders can hear from the board including their plans for turning around performance. It would also be an opportunity for shareholders to influence management through voting on company resolutions such as executive remuneration, which could impact the firm significantly. From our analysis, we think CEO compensation may need a review in light of the recent performance.

View our latest analysis for CPM Group

Comparing CPM Group Limited's CEO Compensation With The Industry

At the time of writing, our data shows that CPM Group Limited has a market capitalization of HK$270m, and reported total annual CEO compensation of HK$7.1m for the year to December 2023. We note that's a decrease of 11% compared to last year. In particular, the salary of HK$5.64m, makes up a huge portion of the total compensation being paid to the CEO.

For comparison, other companies in the Hong Kong Chemicals industry with market capitalizations below HK$1.6b, reported a median total CEO compensation of HK$1.5m. Hence, we can conclude that Philip Tsui is remunerated higher than the industry median.

Component	2023	2022	Proportion (2023)
Salary	HK$5.6m	HK$5.6m	79%
Other	HK$1.5m	HK$2.3m	21%
Total Compensation	HK$7.1m	HK$8.0m	100%

On an industry level, around 74% of total compensation represents salary and 26% is other remuneration. Our data reveals that CPM Group 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.

CPM Group Limited's Growth

Over the last three years, CPM Group Limited has shrunk its earnings per share by 40% per year. It saw its revenue drop 27% over the last year.

Few shareholders would be pleased to read that EPS have declined. And the fact that revenue is down year on year arguably paints an ugly picture. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has CPM Group Limited Been A Good Investment?

The return of -39% over three years would not have pleased CPM Group Limited shareholders. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

In Summary...

Along with the business performing poorly, shareholders have suffered with poor share price returns on their investments, suggesting that there's little to no chance of them being in favor of a CEO pay raise. At the upcoming AGM, management will get a chance to explain how they plan to get the business back on track and address the concerns from investors.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. That's why we did some digging and identified 1 warning sign for CPM Group that investors should think about before committing capital to this stock.

Switching gears from CPM Group, 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. 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.