We Think Shareholders May Want To Consider A Review Of SK Target Group Limited's (HKG:8427) CEO Compensation Package

SK Target Group Limited (HKG:8427) has not performed well recently and CEO Swee Loh will probably need to up their game. At the upcoming AGM on 24 November 2021, shareholders can hear from the board including their plans for turning around performance. They will also get a chance to influence managerial decision-making through voting on resolutions such as executive remuneration, which may impact firm value in the future. We present the case why we think CEO compensation is out of sync with company performance.

See our latest analysis for SK Target Group

Comparing SK Target Group Limited's CEO Compensation With the industry

Our data indicates that SK Target Group Limited has a market capitalization of HK$31m, and total annual CEO compensation was reported as RM339k for the year to May 2021. This means that the compensation hasn't changed much from last year. We note that the salary of RM188.0k makes up a sizeable portion of the total compensation received by the CEO.

On comparing similar-sized companies in the industry with market capitalizations below HK$1.6b, we found that the median total CEO compensation was RM339k. This suggests that SK Target Group remunerates its CEO largely in line with the industry average. Furthermore, Swee Loh directly owns HK$8.9m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2021	2020	Proportion (2021)
Salary	RM188k	RM192k	55%
Other	RM151k	RM140k	45%
Total Compensation	RM339k	RM332k	100%

Talking in terms of the industry, salary represented approximately 80% of total compensation out of all the companies we analyzed, while other remuneration made up 20% of the pie. SK Target Group pays a modest slice of remuneration through salary, as compared to the broader industry. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.

A Look at SK Target Group Limited's Growth Numbers

Over the last three years, SK Target Group Limited has shrunk its earnings per share by 25% per year. Its revenue is down 2.0% over the previous year.

The decline in EPS is a bit concerning. And the fact that revenue is down year on year arguably paints an ugly picture. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has SK Target Group Limited Been A Good Investment?

Few SK Target Group Limited shareholders would feel satisfied with the return of -83% over three years. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

Given that shareholders haven't seen any positive returns on their investment, not to mention the lack of earnings growth, this may suggest that few of them would be willing to award the CEO with a pay rise. At the upcoming AGM, the board will get the chance to explain the steps it plans to take to improve business performance.

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 did our research and identified 5 warning signs (and 2 which make us uncomfortable) in SK Target Group we think you should know about.

Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.

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.

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