Vongroup Limited's (HKG:318) CEO Compensation Looks Acceptable To Us And Here's Why

Shareholders may be wondering what CEO David Vong plans to do to improve the less than great performance at Vongroup Limited (HKG:318) recently. One way they can exercise their influence on management is through voting on resolutions, such as executive remuneration at the next AGM, coming up on 31 October 2022. Setting appropriate executive remuneration to align with the interests of shareholders may also be a way to influence the company performance in the long run. We have prepared some analysis below to show that CEO compensation looks to be reasonable.

Our analysis indicates that 318 is potentially undervalued!

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

At the time of writing, our data shows that Vongroup Limited has a market capitalization of HK$58m, and reported total annual CEO compensation of HK$1.3m for the year to April 2022. That's a slight decrease of 6.3% on the prior year. We think total compensation is more important but our data shows that the CEO salary is lower, at HK$600k.

For comparison, other companies in the industry with market capitalizations below HK$1.6b, reported a median total CEO compensation of HK$2.3m. This suggests that David Vong is paid below the industry median. What's more, David Vong holds HK$31m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component	2022	2021	Proportion (2022)
Salary	HK$600k	HK$600k	46%
Other	HK$700k	HK$787k	54%
Total Compensation	HK$1.3m	HK$1.4m	100%

On an industry level, roughly 72% of total compensation represents salary and 28% is other remuneration. It's interesting to note that Vongroup allocates a smaller portion of compensation to salary in comparison to the broader industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

A Look at Vongroup Limited's Growth Numbers

Vongroup Limited has reduced its earnings per share by 8.5% a year over the last three years. In the last year, its revenue is up 74%.

The decrease in EPS could be a concern for some investors. On the other hand, the strong revenue growth suggests the business is growing. In conclusion we can't form a strong opinion about business performance yet; but it's one worth watching. 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?

With a total shareholder return of -40% over three years, Vongroup Limited shareholders would by and large be disappointed. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

The fact that shareholders have earned a negative share price return is certainly disconcerting. The downward trend in share price performance may be attributable to the the fact that earnings growth has gone backwards. In the upcoming AGM, shareholders will get the opportunity to discuss these concerns with the board and assess if the board's plan is likely to improve company performance.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. In our study, we found 4 warning signs for Vongroup you should be aware of, and 1 of them is concerning.

Switching gears from Vongroup, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.

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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.