Stock Analysis

We Think Shareholders Are Less Likely To Approve A Pay Rise For G.A. Holdings Limited's (HKG:8126) CEO For Now

SEHK:8126
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In the past three years, the share price of G.A. Holdings Limited (HKG:8126) has struggled to grow and now shareholders are sitting on a loss. What is concerning is that despite positive EPS growth, the share price has not tracked the trend in fundamentals. The AGM coming up on the 10 May 2021 could be an opportunity for shareholders to bring these concerns to the board's attention. 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.

View our latest analysis for G.A. Holdings

How Does Total Compensation For Choong Yew Choy Compare With Other Companies In The Industry?

According to our data, G.A. Holdings Limited has a market capitalization of HK$133m, and paid its CEO total annual compensation worth HK$1.5m over the year to December 2020. We note that's a small decrease of 6.2% on last year. It is worth noting that the CEO compensation consists entirely of the salary, worth HK$1.5m.

For comparison, other companies in the industry with market capitalizations below HK$1.6b, reported a median total CEO compensation of HK$1.5m. From this we gather that Choong Yew Choy is paid around the median for CEOs in the industry.

Component20202019Proportion (2020)
Salary HK$1.5m HK$1.6m 100%
Other - - -
Total CompensationHK$1.5m HK$1.6m100%

Speaking on an industry level, nearly 95% of total compensation represents salary, while the remainder of 5% is other remuneration. Speaking on a company level, G.A. Holdings prefers to tread along a traditional path, disbursing all compensation through a salary. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

ceo-compensation
SEHK:8126 CEO Compensation May 3rd 2021

G.A. Holdings Limited's Growth

Over the past three years, G.A. Holdings Limited has seen its earnings per share (EPS) grow by 4.6% per year. Its revenue is up 1.1% over the last year.

We're not particularly impressed by the revenue growth, but the modest improvement in EPS is good. So there are some positives here, but not enough to earn high praise. 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 G.A. Holdings Limited Been A Good Investment?

With a three year total loss of 28% for the shareholders, G.A. Holdings Limited would certainly have some dissatisfied shareholders. So shareholders would probably want the company to be less generous with CEO compensation.

In Summary...

G.A. Holdings pays CEO compensation exclusively through a salary, with non-salary compensation completely ignored. The fact that shareholders are sitting on a loss on the value of their shares in the past few years is certainly disconcerting. A huge lag in share price growth when earnings have grown may indicate there could be other issues that are affecting the company at the moment that the market is focused on. 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 pay is simply one of the many factors that need to be considered while examining business performance. In our study, we found 3 warning signs for G.A. Holdings you should be aware of, and 2 of them are significant.

Switching gears from G.A. Holdings, 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.

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