Increases to CEO Compensation Might Be Put On Hold For Now at Tan Chong International Limited (HKG:693)

Key Insights

• Tan Chong International will host its Annual General Meeting on 27th of May
• Salary of HK$4.12m is part of CEO Glenn Tan's total remuneration
• Total compensation is 671% above industry average
• Tan Chong International's EPS grew by 8.2% over the past three years while total shareholder loss over the past three years was 26%

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The underwhelming share price performance of Tan Chong International Limited (HKG:693) in the past three years would have disappointed many shareholders. However, what is unusual is that EPS growth has been positive, suggesting that the share price has diverged from fundamentals. These are some of the concerns that shareholders may want to bring up at the next AGM held on 27th of May. They could also influence management through voting on resolutions such as executive remuneration. Here's our take on why we think shareholders may want to be cautious of approving a raise for the CEO at the moment.

See our latest analysis for Tan Chong International

How Does Total Compensation For Glenn Tan Compare With Other Companies In The Industry?

According to our data, Tan Chong International Limited has a market capitalization of HK$2.4b, and paid its CEO total annual compensation worth HK$4.6m over the year to December 2024. Notably, that's a decrease of 29% over the year before. In particular, the salary of HK$4.12m, makes up a huge portion of the total compensation being paid to the CEO.

For comparison, other companies in the Hong Kong Retail Distributors industry with market capitalizations ranging between HK$1.6b and HK$6.3b had a median total CEO compensation of HK$599k. This suggests that Glenn Tan is paid more than the median for the industry.

Component	2024	2023	Proportion (2024)
Salary	HK$4.1m	HK$5.5m	89%
Other	HK$495k	HK$962k	11%
Total Compensation	HK$4.6m	HK$6.5m	100%

On an industry level, around 89% of total compensation represents salary and 11% is other remuneration. Tan Chong International is largely mirroring the industry average when it comes to the share a salary enjoys in overall compensation. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

Tan Chong International Limited's Growth

Tan Chong International Limited's earnings per share (EPS) grew 8.2% per year over the last three years. Its revenue is down 8.2% over the previous year.

We would argue that the lack of revenue growth in the last year is less than ideal, but the modest EPS growth gives us some relief. In conclusion we can't form a strong opinion about business performance yet; but it's one worth watching. 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 Tan Chong International Limited Been A Good Investment?

Since shareholders would have lost about 26% over three years, some Tan Chong International Limited investors would surely be feeling negative emotions. So shareholders would probably want the company to be less generous with CEO compensation.

To Conclude...

The fact that shareholders are sitting on a loss on the value of their shares in the past few years is certainly disconcerting. The fact that the stock price hasn't grown along with earnings may indicate that other issues may be affecting that stock. If there are some unknown variables that are influencing the stock's price, surely shareholders would have some concerns. The upcoming AGM will be a chance for shareholders to question the board on key matters, such as CEO remuneration or any other issues they might have and revisit their investment thesis with regards to the company.

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. That's why we did our research, and identified 3 warning signs for Tan Chong International (of which 1 shouldn't be ignored!) that you should know about in order to have a holistic understanding of the stock.

Important note: Tan Chong International 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.