We Discuss Why Vongroup Limited's (HKG:318) CEO Compensation May Be Closely Reviewed

Key Insights

• Vongroup's Annual General Meeting to take place on 31st of October
• Total pay for CEO David Vong includes HK$600.0k salary
• Total compensation is similar to the industry average
• Vongroup's EPS declined by 9.5% over the past three years while total shareholder loss over the past three years was 9.0%

The results at Vongroup Limited (HKG:318) have been quite disappointing recently and CEO David Vong bears some responsibility for this. At the upcoming AGM on 31st of October, shareholders can hear from the board including their plans for turning around performance. This will be also be a chance where they can challenge the board on company direction and vote on resolutions such as executive remuneration. From our analysis, we think CEO compensation may need a review in light of the recent performance.

Check out our latest analysis for Vongroup

How Does Total Compensation For David Vong Compare With Other Companies In The Industry?

Our data indicates that Vongroup Limited has a market capitalization of HK$110m, and total annual CEO compensation was reported as HK$1.3m for the year to April 2024. We note that's an increase of 13% above last year. While we always look at total compensation first, our analysis shows that the salary component is less, at HK$600k.

For comparison, other companies in the Hong Kong Real Estate industry with market capitalizations below HK$1.6b, reported a median total CEO compensation of HK$1.8m. From this we gather that David Vong is paid around the median for CEOs in the industry. What's more, David Vong holds HK$57m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component	2024	2023	Proportion (2024)
Salary	HK$600k	HK$600k	45%
Other	HK$720k	HK$564k	55%
Total Compensation	HK$1.3m	HK$1.2m	100%

On an industry level, around 78% of total compensation represents salary and 22% is other remuneration. In Vongroup's case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

A Look at Vongroup Limited's Growth Numbers

Over the last three years, Vongroup Limited has shrunk its earnings per share by 9.5% per year. In the last year, its revenue is up 1.2%.

The decline in EPS is a bit concerning. And the modest revenue growth over 12 months isn't much comfort against the reduced EPS. 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 Vongroup Limited Been A Good Investment?

Since shareholders would have lost about 9.0% over three years, some Vongroup Limited investors would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

Not only have shareholders not seen a favorable return on their investment, but the business hasn't performed well either. Few shareholders would be willing to award the CEO with a pay raise. At the upcoming AGM, management will get a chance to explain how they plan to get the business back on track and address the concerns from investors.

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. That's why we did our research, and identified 3 warning signs for Vongroup (of which 1 is a bit unpleasant!) that you should know about in order to have a holistic understanding of the stock.

Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies that have HIGH return on equity and low debt.

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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.