Stock Analysis

We Think Some Shareholders May Hesitate To Increase Tan Chong International Limited's (HKG:693) CEO Compensation

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Key Insights

  • Tan Chong International will host its Annual General Meeting on 28th of May
  • Salary of HK$5.50m is part of CEO Glenn Tan's total remuneration
  • The overall pay is 690% above the industry average
  • Over the past three years, Tan Chong International's EPS grew by 209% and over the past three years, the total loss to shareholders 25%

Shareholders of Tan Chong International Limited (HKG:693) will have been dismayed by the negative share price return over the last three years. What is concerning is that despite positive EPS growth, the share price has not tracked the trend in fundamentals. These are some of the concerns that shareholders may want to bring up at the next AGM held on 28th of May. They could also try to influence management and firm direction through voting on resolutions such as executive remuneration and other company matters. We think shareholders might be reluctant to increase compensation for the CEO at the moment, according to our analysis below.

Check out our latest analysis for Tan Chong International

Comparing Tan Chong International Limited's CEO Compensation With The Industry

At the time of writing, our data shows that Tan Chong International Limited has a market capitalization of HK$2.7b, and reported total annual CEO compensation of HK$6.5m for the year to December 2023. That's a notable decrease of 23% on last year. Notably, the salary which is HK$5.50m, represents most of the total compensation being paid.

For comparison, other companies in the Hong Kong Retail Distributors industry with market capitalizations ranging between HK$1.6b and HK$6.2b had a median total CEO compensation of HK$818k. Hence, we can conclude that Glenn Tan is remunerated higher than the industry median.

Component20232022Proportion (2023)
Salary HK$5.5m HK$5.4m 85%
Other HK$962k HK$3.0m 15%
Total CompensationHK$6.5m HK$8.3m100%

On an industry level, around 94% of total compensation represents salary and 6% is other remuneration. Our data reveals that Tan Chong International allocates salary more or less in line with the wider market. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

SEHK:693 CEO Compensation May 21st 2024

A Look at Tan Chong International Limited's Growth Numbers

Over the past three years, Tan Chong International Limited has seen its earnings per share (EPS) grow by 209% per year. Its revenue is up 2.6% over the last year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's also good to see modest revenue growth, suggesting the underlying business is healthy. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Tan Chong International Limited Been A Good Investment?

Since shareholders would have lost about 25% over three years, some Tan Chong International Limited investors would surely be feeling negative emotions. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

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.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. That's why we did our research, and identified 4 warning signs for Tan Chong International (of which 1 is a bit concerning!) that you should know about in order to have a holistic understanding of the stock.

Switching gears from Tan Chong International, 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.

Valuation is complex, but we're helping make it simple.

Find out whether Tan Chong International is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

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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.