Here's Why Shareholders Should Examine K. Wah International Holdings Limited's (HKG:173) CEO Compensation Package More Closely

K. Wah International Holdings Limited (HKG:173) has not performed well recently and CEO Che-Woo Lui will probably need to up their game. Shareholders will be interested in what the board will have to say about turning performance around at the next AGM on 09 June 2021. 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.

View our latest analysis for K. Wah International Holdings

How Does Total Compensation For Che-Woo Lui Compare With Other Companies In The Industry?

According to our data, K. Wah International Holdings Limited has a market capitalization of HK$12b, and paid its CEO total annual compensation worth HK$21m over the year to December 2020. That's mostly flat as compared to the prior year's compensation. Notably, the salary which is HK$14.1m, represents most of the total compensation being paid.

On comparing similar companies from the same industry with market caps ranging from HK$7.8b to HK$25b, we found that the median CEO total compensation was HK$5.1m. Accordingly, our analysis reveals that K. Wah International Holdings Limited pays Che-Woo Lui north of the industry median. Furthermore, Che-Woo Lui directly owns HK$6.3b worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2020	2019	Proportion (2020)
Salary	HK$14m	HK$14m	69%
Other	HK$6.5m	HK$6.7m	31%
Total Compensation	HK$21m	HK$20m	100%

On an industry level, roughly 70% of total compensation represents salary and 30% is other remuneration. K. Wah International Holdings is largely mirroring the industry average when it comes to the share a salary enjoys in overall compensation. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

K. Wah International Holdings Limited's Growth

Over the last three years, K. Wah International Holdings Limited has shrunk its earnings per share by 6.6% per year. It achieved revenue growth of 10.0% over the last year.

The decline in EPS is a bit concerning. The fairly low revenue growth fails to impress given that the EPS is down. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has K. Wah International Holdings Limited Been A Good Investment?

Since shareholders would have lost about 15% over three years, some K. Wah International Holdings Limited investors would surely be feeling negative emotions. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

In Summary...

Given that shareholders haven't seen any positive returns on their investment, not to mention the lack of earnings growth, this may suggest that few of them would be willing to award the CEO with a pay rise. At the upcoming AGM, they can question the management's plans and strategies to turn performance around and reassess their investment thesis in regards to the company.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. That's why we did our research, and identified 3 warning signs for K. Wah International Holdings (of which 2 shouldn't be ignored!) 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. 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.
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