Shareholders May Be Wary Of Increasing Cheuk Nang (Holdings) Limited's (HKG:131) CEO Compensation Package

Key Insights

• Cheuk Nang (Holdings) will host its Annual General Meeting on 22nd of November
• Total pay for CEO Cecil Chao includes HK$9.31m salary
• Total compensation is 373% above industry average
• Cheuk Nang (Holdings)'s EPS declined by 25% over the past three years while total shareholder loss over the past three years was 38%

Shareholders will probably not be too impressed with the underwhelming results at Cheuk Nang (Holdings) Limited (HKG:131) recently. Shareholders can take the chance to hold the board and management accountable for the unsatisfactory performance at the next AGM on 22nd of November. 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. The data we present below explains why we think CEO compensation is not consistent with recent performance.

View our latest analysis for Cheuk Nang (Holdings)

How Does Total Compensation For Cecil Chao Compare With Other Companies In The Industry?

At the time of writing, our data shows that Cheuk Nang (Holdings) Limited has a market capitalization of HK$1.1b, and reported total annual CEO compensation of HK$9.3m for the year to June 2023. That's mostly flat as compared to the prior year's compensation. It is worth noting that the CEO compensation consists entirely of the salary, worth HK$9.3m.

On comparing similar-sized companies in the Hong Kong Real Estate industry with market capitalizations below HK$1.6b, we found that the median total CEO compensation was HK$2.0m. This suggests that Cecil Chao is paid more than the median for the industry. Moreover, Cecil Chao also holds HK$850m worth of Cheuk Nang (Holdings) stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component	2023	2022	Proportion (2023)
Salary	HK$9.3m	HK$9.1m	100%
Other	-	-	-
Total Compensation	HK$9.3m	HK$9.1m	100%

On an industry level, roughly 77% of total compensation represents salary and 23% is other remuneration. On a company level, Cheuk Nang (Holdings) prefers to reward its CEO through a salary, opting not to pay Cecil Chao 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.

Cheuk Nang (Holdings) Limited's Growth

Cheuk Nang (Holdings) Limited has reduced its earnings per share by 25% a year over the last three years. Its revenue is down 20% 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. 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 Cheuk Nang (Holdings) Limited Been A Good Investment?

With a total shareholder return of -38% over three years, Cheuk Nang (Holdings) Limited shareholders would by and large be disappointed. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

Cheuk Nang (Holdings) pays CEO compensation exclusively through a salary, with non-salary compensation completely ignored. 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, they can question the management's plans and strategies to turn performance around and reassess their investment thesis in regards to the company.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. We identified 2 warning signs for Cheuk Nang (Holdings) (1 doesn't sit too well with us!) that you should be aware of before investing here.

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.

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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.