Shareholders Will Probably Not Have Any Issues With OOH Holdings Limited's (HKG:8091) CEO Compensation

Despite strong share price growth of 33% for OOH Holdings Limited (HKG:8091) over the last few years, earnings growth has been disappointing, which suggests something is amiss. Some of these issues will occupy shareholders' minds as the AGM rolls around on 20 August 2021. One way that shareholders can influence managerial decisions is through voting on CEO and executive remuneration packages, which studies show could impact company performance. In our analysis below, we show why shareholders may consider holding off a raise for the CEO's compensation until company performance improves.

See our latest analysis for OOH Holdings

Comparing OOH Holdings Limited's CEO Compensation With the industry

According to our data, OOH Holdings Limited has a market capitalization of HK$102m, and paid its CEO total annual compensation worth HK$2.8m over the year to March 2021. That's a modest increase of 7.1% on the prior year. It is worth noting that the CEO compensation consists entirely of the salary, worth HK$2.8m.

For comparison, other companies in the industry with market capitalizations below HK$1.6b, reported a median total CEO compensation of HK$2.6m. From this we gather that Irene Chau is paid around the median for CEOs in the industry. Furthermore, Irene Chau directly owns HK$39m worth of shares in the company, implying that they are deeply invested in the company's success.

Talking in terms of the industry, salary represented approximately 92% of total compensation out of all the companies we analyzed, while other remuneration made up 8% of the pie. On a company level, OOH Holdings prefers to reward its CEO through a salary, opting not to pay Irene Chau through non-salary benefits. 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 OOH Holdings Limited's Growth Numbers

OOH Holdings Limited has reduced its earnings per share by 94% a year over the last three years. It saw its revenue drop 9.5% over the last year.

Overall this is not a very positive result for shareholders. 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. 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 OOH Holdings Limited Been A Good Investment?

Boasting a total shareholder return of 33% over three years, OOH Holdings Limited has done well by shareholders. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

To Conclude...

OOH Holdings pays CEO compensation exclusively through a salary, with non-salary compensation completely ignored. While the return to shareholders does look promising, it's hard to ignore the lack of earnings growth and this makes us question whether these strong returns will continue. The upcoming AGM will provide shareholders the opportunity to revisit the company’s remuneration policies and evaluate if the board’s judgement and decision-making is aligned with that of the company’s shareholders.

CEO pay is simply one of the many factors that need to be considered while examining business performance. That's why we did our research, and identified 3 warning signs for OOH Holdings (of which 1 is significant!) that you should know about in order to have a holistic understanding of the stock.

Switching gears from OOH 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. 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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