Shareholders May Not Be So Generous With Tomson Group Limited's (HKG:258) CEO Compensation And Here's Why

Key Insights

• Tomson Group will host its Annual General Meeting on 6th of June
• Total pay for CEO Feng Hsu includes HK$14.2m salary
• The overall pay is 281% above the industry average
• Tomson Group's total shareholder return over the past three years was 5.1% while its EPS was down 38% over the past three years

The share price of Tomson Group Limited (HKG:258) has been growing in the past few years, however, the per-share earnings growth has been lacking, suggesting something is amiss. Some of these issues will occupy shareholders' minds as the AGM rolls around on 6th of June. One way that shareholders can influence managerial decisions is through voting on CEO and executive remuneration packages, which studies show could impact company performance. From the data that we gathered, we think that shareholders should hold off on a raise on CEO compensation until performance starts to show some improvement.

View our latest analysis for Tomson Group

Comparing Tomson Group Limited's CEO Compensation With The Industry

According to our data, Tomson Group Limited has a market capitalization of HK$3.5b, and paid its CEO total annual compensation worth HK$14m over the year to December 2023. That's slightly lower by 3.9% over the previous year. Notably, the salary of HK$14m is the entirety of the CEO compensation.

On examining similar-sized companies in the Hong Kong Real Estate industry with market capitalizations between HK$1.6b and HK$6.3b, we discovered that the median CEO total compensation of that group was HK$3.7m. This suggests that Feng Hsu is paid more than the median for the industry. Moreover, Feng Hsu also holds HK$1.3b worth of Tomson Group 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$14m	HK$15m	100%
Other	-	-	-
Total Compensation	HK$14m	HK$15m	100%

On an industry level, roughly 77% of total compensation represents salary and 23% is other remuneration. On a company level, Tomson Group prefers to reward its CEO through a salary, opting not to pay Feng Hsu 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 Tomson Group Limited's Growth Numbers

Tomson Group Limited has reduced its earnings per share by 38% a year over the last three years. It achieved revenue growth of 12% over the last year.

Few shareholders would be pleased to read that EPS have declined. And while it's good to see some good revenue growth recently, the growth isn't really fast enough for us to put aside my concerns around EPS. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. We don't have analyst forecasts, but you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.

Has Tomson Group Limited Been A Good Investment?

Tomson Group Limited has generated a total shareholder return of 5.1% over three years, so most shareholders wouldn't be too disappointed. Although, there's always room to improve. Accordingly, a proposal to increase CEO remuneration without seeing an improvement in shareholder returns might not be met favorably by most shareholders.

To Conclude...

Tomson Group rewards its CEO solely through a salary, ignoring non-salary benefits completely. Shareholder returns, while positive, should be looked at along with earnings, which have not grown at all recently. This makes us think the share price momentum may slow in the future. In the upcoming AGM, shareholders will get the opportunity to discuss any concerns with the board, including those related to CEO remuneration and assess if the board's plan will likely improve performance in the future.

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 4 warning signs for Tomson Group (of which 2 are a bit unpleasant!) that you should know about in order to have a holistic understanding of the stock.

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.