Tai Cheung Holdings Limited's (HKG:88) CEO Compensation Is Looking A Bit Stretched At The Moment

Key Insights

• Tai Cheung Holdings' Annual General Meeting to take place on 28th of August
• Salary of HK$3.65m is part of CEO David Chan's total remuneration
• The total compensation is 36% higher than the average for the industry
• Tai Cheung Holdings' three-year loss to shareholders was 32% while its EPS grew by 66% over the past three years

Shareholders of Tai Cheung Holdings Limited (HKG:88) will have been dismayed by the negative share price return over the last three years. However, what is unusual is that EPS growth has been positive, suggesting that the share price has diverged from fundamentals. Shareholders may want to question the board on the future direction of the company at the upcoming AGM on 28th of August. They could also influence management through voting on resolutions such as executive remuneration. We discuss below why we think shareholders should be cautious of approving a raise for the CEO at the moment.

Check out our latest analysis for Tai Cheung Holdings

Comparing Tai Cheung Holdings Limited's CEO Compensation With The Industry

According to our data, Tai Cheung Holdings Limited has a market capitalization of HK$1.9b, and paid its CEO total annual compensation worth HK$4.8m over the year to March 2024. That's a fairly small increase of 3.7% over the previous year. We note that the salary portion, which stands at HK$3.65m constitutes the majority of total compensation received by the CEO.

For comparison, other companies in the Hong Kong Real Estate industry with market capitalizations ranging between HK$780m and HK$3.1b had a median total CEO compensation of HK$3.5m. Accordingly, our analysis reveals that Tai Cheung Holdings Limited pays David Chan north of the industry median. Furthermore, David Chan directly owns HK$851m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2024	2023	Proportion (2024)
Salary	HK$3.7m	HK$3.5m	76%
Other	HK$1.2m	HK$1.1m	24%
Total Compensation	HK$4.8m	HK$4.7m	100%

On an industry level, around 77% of total compensation represents salary and 23% is other remuneration. There isn't a significant difference between Tai Cheung Holdings and the broader market, in terms of salary allocation in the overall compensation package. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

Tai Cheung Holdings Limited's Growth

Tai Cheung Holdings Limited has seen its earnings per share (EPS) increase by 66% a year over the past three years. In the last year, its revenue is up 84%.

This demonstrates that the company has been improving recently and is good news for the shareholders. The combination of strong revenue growth with medium-term EPS improvement certainly points to the kind of growth we like to see. 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 Tai Cheung Holdings Limited Been A Good Investment?

With a total shareholder return of -32% over three years, Tai Cheung Holdings Limited shareholders would by and large be disappointed. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

In Summary...

Despite the growth in its earnings, the share price decline in the past three years is certainly concerning. The stock's movement is disjointed with the company's earnings growth, which ideally should move in the same direction. If there are some unknown variables that are influencing the stock's price, surely shareholders would have some concerns. The upcoming AGM will be a chance for shareholders to question the board on key matters, such as CEO remuneration or any other issues they might have and revisit their investment thesis with regards to the company.

CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. We've identified 1 warning sign for Tai Cheung Holdings that investors should be aware of in a dynamic business environment.

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.