We Think Cheuk Nang (Holdings) Limited's (HKG:131) CEO Compensation Package Needs To Be Put Under A Microscope

The results at Cheuk Nang (Holdings) Limited (HKG:131) have been quite disappointing recently and CEO Cecil Chao bears some responsibility for this. Shareholders will be interested in what the board will have to say about turning performance around at the next AGM on 23 November 2022. 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.

Check out the opportunities and risks within the HK Real Estate industry.

Comparing Cheuk Nang (Holdings) Limited's CEO Compensation With The Industry

According to our data, Cheuk Nang (Holdings) Limited has a market capitalization of HK$1.4b, and paid its CEO total annual compensation worth HK$9.1m over the year to June 2022. This means that the compensation hasn't changed much from last year. Notably, the salary of HK$9.1m is the entirety of the CEO compensation.

On examining similar-sized companies in the industry with market capitalizations between HK$782m and HK$3.1b, we discovered that the median CEO total compensation of that group was HK$3.1m. This suggests that Cecil Chao is paid more than the median for the industry. Moreover, Cecil Chao also holds HK$1.0b 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	2022	2021	Proportion (2022)
Salary	HK$9.1m	HK$9.0m	100%
Other	-	-	-
Total Compensation	HK$9.1m	HK$9.0m	100%

On an industry level, around 70% of total compensation represents salary and 30% is other remuneration. Speaking on a company level, Cheuk Nang (Holdings) prefers to tread along a traditional path, disbursing all compensation through a salary. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

Cheuk Nang (Holdings) Limited's Growth

Over the last three years, Cheuk Nang (Holdings) Limited has shrunk its earnings per share by 103% per year. Its revenue is down 94% over the previous year.

Few shareholders would be pleased to read that EPS have declined. 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. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Cheuk Nang (Holdings) Limited Been A Good Investment?

The return of -34% over three years would not have pleased Cheuk Nang (Holdings) Limited shareholders. So shareholders would probably want the company to be less generous with CEO compensation.

To Conclude...

Cheuk Nang (Holdings) rewards its CEO solely through a salary, ignoring non-salary benefits completely. 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, the board will get the chance to explain the steps it plans to take to improve business performance.

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 Cheuk Nang (Holdings) that you should be aware of before investing.

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.