Should Shareholders Worry About Veeko International Holdings Limited's (HKG:1173) CEO Compensation Package?

The underwhelming performance at Veeko International Holdings Limited (HKG:1173) recently has probably not pleased shareholders. There is an opportunity for shareholders to influence management to turn the performance around by voting on resolutions such as executive remuneration at the AGM coming up on 29 September 2021. From our analysis below, we think CEO compensation looks appropriate for now.

Check out our latest analysis for Veeko International Holdings

How Does Total Compensation For Yuk Sum Lam Compare With Other Companies In The Industry?

According to our data, Veeko International Holdings Limited has a market capitalization of HK$126m, and paid its CEO total annual compensation worth HK$657k over the year to March 2021. That's a modest increase of 5.6% on the prior year. In particular, the salary of HK$627.0k, makes up a huge portion of the total compensation being paid to the CEO.

On comparing similar-sized companies in the industry with market capitalizations below HK$1.6b, we found that the median total CEO compensation was HK$1.7m. This suggests that Yuk Sum Lam is paid below the industry median. Moreover, Yuk Sum Lam also holds HK$14m worth of Veeko International Holdings stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component	2021	2020	Proportion (2021)
Salary	HK$627k	HK$594k	95%
Other	HK$30k	HK$28k	5%
Total Compensation	HK$657k	HK$622k	100%

On an industry level, roughly 88% of total compensation represents salary and 12% is other remuneration. Investors will find it interesting that Veeko International 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.

A Look at Veeko International Holdings Limited's Growth Numbers

Over the last three years, Veeko International Holdings Limited has shrunk its earnings per share by 70% per year. It saw its revenue drop 50% over the last year.

Few shareholders would be pleased to read that EPS have declined. 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 Veeko International Holdings Limited Been A Good Investment?

The return of -72% over three years would not have pleased Veeko International Holdings Limited shareholders. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

Yuk Sum receives almost all of their compensation through a salary. 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.

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 3 warning signs for Veeko International Holdings you should be aware of, and 1 of them is a bit concerning.

Important note: Veeko International 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.

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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.
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