Shareholders May Be More Conservative With Shun Tak Holdings Limited's (HKG:242) CEO Compensation For Now

Key Insights

• Shun Tak Holdings will host its Annual General Meeting on 5th of June
• Total pay for CEO Pansy Catilina Ho includes HK$7.25m salary
• The overall pay is 123% above the industry average
• Shun Tak Holdings' three-year loss to shareholders was 67% while its EPS was down 93% over the past three years

In the past three years, the share price of Shun Tak Holdings Limited (HKG:242) has struggled to grow and now shareholders are sitting on a loss. In addition, the company's per-share earnings growth is not looking good, despite growing revenues. The AGM coming up on 5th of June will be an opportunity for shareholders to have their concerns addressed by the board and for them to exercise their influence on management through voting on resolutions such as executive remuneration. Here's why we think shareholders should hold off on a raise for the CEO at the moment.

Check out our latest analysis for Shun Tak Holdings

How Does Total Compensation For Pansy Catilina Ho Compare With Other Companies In The Industry?

At the time of writing, our data shows that Shun Tak Holdings Limited has a market capitalization of HK$2.4b, and reported total annual CEO compensation of HK$7.7m for the year to December 2023. That's mostly flat as compared to the prior year's compensation. In particular, the salary of HK$7.25m, makes up a huge portion of the total compensation being paid to the CEO.

On comparing similar companies from the Hong Kong Real Estate industry with market caps ranging from HK$1.6b to HK$6.2b, we found that the median CEO total compensation was HK$3.4m. Hence, we can conclude that Pansy Catilina Ho is remunerated higher than the industry median. Furthermore, Pansy Catilina Ho directly owns HK$453m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2023	2022	Proportion (2023)
Salary	HK$7.2m	HK$7.2m	95%
Other	HK$409k	HK$409k	5%
Total Compensation	HK$7.7m	HK$7.6m	100%

Speaking on an industry level, nearly 77% of total compensation represents salary, while the remainder of 23% is other remuneration. It's interesting to note that Shun Tak Holdings pays out a greater portion of remuneration through salary, compared to the industry. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

Shun Tak Holdings Limited's Growth

Over the last three years, Shun Tak Holdings Limited has shrunk its earnings per share by 93% per year. It achieved revenue growth of 21% over the last year.

Investors would be a bit wary of companies that have lower EPS But in contrast the revenue growth is strong, suggesting future potential for EPS growth. These two metrics are moving in different directions, so while it's hard to be confident judging performance, we think the stock is worth watching. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.

Has Shun Tak Holdings Limited Been A Good Investment?

The return of -67% over three years would not have pleased Shun Tak Holdings Limited shareholders. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

The returns to shareholders is disappointing along with lack of earnings growth, which goes some way in explaining the poor returns. 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.

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 Shun Tak Holdings that you should be aware of before investing.

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.