Should Shareholders Reconsider Upbest Group Limited's (HKG:335) CEO Compensation Package?

Shareholders will probably not be too impressed with the underwhelming results at Upbest Group Limited (HKG:335) recently. Shareholders can take the chance to hold the board and management accountable for the unsatisfactory performance at the next AGM on 27 August 2021. 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. From our analysis, we think CEO compensation may need a review in light of the recent performance.

Check out our latest analysis for Upbest Group

How Does Total Compensation For Annie Cheng Compare With Other Companies In The Industry?

According to our data, Upbest Group Limited has a market capitalization of HK$2.2b, and paid its CEO total annual compensation worth HK$859k over the year to March 2021. We note that's an increase of 47% above last year. We note that the salary portion, which stands at HK$815.0k constitutes the majority of total compensation received by the CEO.

In comparison with other companies in the industry with market capitalizations ranging from HK$779m to HK$3.1b, the reported median CEO total compensation was HK$918k. So it looks like Upbest Group compensates Annie Cheng in line with the median for the industry.

Component	2021	2020	Proportion (2021)
Salary	HK$815k	HK$542k	95%
Other	HK$44k	HK$41k	5%
Total Compensation	HK$859k	HK$583k	100%

On an industry level, roughly 94% of total compensation represents salary and 6% is other remuneration. Upbest Group is largely mirroring the industry average when it comes to the share a salary enjoys in overall compensation. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.

Upbest Group Limited's Growth

Over the last three years, Upbest Group Limited has shrunk its earnings per share by 34% per year. In the last year, its revenue is down 24%.

Overall this is not a very positive result for shareholders. And the impression is worse when you consider revenue is down year-on-year. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. While we don't have analyst forecasts for the company, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.

Has Upbest Group Limited Been A Good Investment?

Given the total shareholder loss of 17% over three years, many shareholders in Upbest Group Limited are probably rather dissatisfied, to say the least. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

To Conclude...

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.

CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. We did our research and identified 2 warning signs (and 1 which can't be ignored) in Upbest Group we think you should know about.

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.
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