We Think Shareholders Are Less Likely To Approve A Large Pay Rise For Celestial Asia Securities Holdings Limited's (HKG:1049) CEO For Now

Key Insights

• Celestial Asia Securities Holdings' Annual General Meeting to take place on 18th of June
• Total pay for CEO Bankee Kwan includes HK$4.20m salary
• The overall pay is 148% above the industry average
• Celestial Asia Securities Holdings' EPS declined by 100% over the past three years while total shareholder return over the past three years was 25%

The share price of Celestial Asia Securities Holdings Limited (HKG:1049) has been growing in the past few years, however, the per-share earnings growth has been lacking, suggesting something is amiss. These concerns will be at the front of shareholders' minds as they go into the AGM coming up on 18th of June. One way that shareholders can influence managerial decisions is through voting on CEO and executive remuneration packages, which studies show could impact company performance. From what we gathered, we think shareholders should be wary of raising CEO compensation until the company shows some marked improvement.

Check out our latest analysis for Celestial Asia Securities Holdings

Comparing Celestial Asia Securities Holdings Limited's CEO Compensation With The Industry

Our data indicates that Celestial Asia Securities Holdings Limited has a market capitalization of HK$136m, and total annual CEO compensation was reported as HK$4.2m for the year to December 2023. Notably, that's an increase of 31% over the year before. In particular, the salary of HK$4.20m, makes up a huge portion of the total compensation being paid to the CEO.

On comparing similar-sized companies in the Hong Kong Specialty Retail industry with market capitalizations below HK$1.6b, we found that the median total CEO compensation was HK$1.7m. Accordingly, our analysis reveals that Celestial Asia Securities Holdings Limited pays Bankee Kwan north of the industry median. What's more, Bankee Kwan holds HK$68m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component	2023	2022	Proportion (2023)
Salary	HK$4.2m	HK$2.7m	99%
Other	HK$36k	HK$577k	1%
Total Compensation	HK$4.2m	HK$3.2m	100%

On an industry level, around 89% of total compensation represents salary and 11% is other remuneration. Investors will find it interesting that Celestial Asia Securities Holdings pays the bulk of its rewards through a traditional salary, instead of non-salary benefits. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

Celestial Asia Securities Holdings Limited's Growth

Over the last three years, Celestial Asia Securities Holdings Limited has shrunk its earnings per share by 100% per year. In the last year, its revenue is down 16%.

Overall this is not a very positive result for shareholders. This is compounded by the fact revenue is actually down on last year. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. We don't have analyst forecasts, but you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.

Has Celestial Asia Securities Holdings Limited Been A Good Investment?

Celestial Asia Securities Holdings Limited has generated a total shareholder return of 25% over three years, so most shareholders would be reasonably content. But they probably don't want to see the CEO paid more than is normal for companies around the same size.

In Summary...

Celestial Asia Securities Holdings pays its CEO a majority of compensation through a salary. Despite the positive returns on shareholders' investments, the fact that earnings have failed to grow makes us skeptical about whether these returns will continue. The upcoming AGM will provide shareholders the opportunity to revisit the company’s remuneration policies and evaluate if the board’s judgement and decision-making is aligned with that of the company’s shareholders.

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 2 warning signs for Celestial Asia Securities Holdings that you should be aware of before investing.

Important note: Celestial Asia Securities Holdings is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.