Shareholders Will Probably Hold Off On Increasing Solomon Systech (International) Limited's (HKG:2878) CEO Compensation For The Time Being

Key Insights

• Solomon Systech (International)'s Annual General Meeting to take place on 20th of June
• Salary of US$680.0k is part of CEO Raymond Wang's total remuneration
• Total compensation is 164% above industry average
• Solomon Systech (International)'s EPS grew by 18% over the past three years while total shareholder loss over the past three years was 56%

Shareholders of Solomon Systech (International) Limited (HKG:2878) will have been dismayed by the negative share price return over the last three years. However, what is unusual is that EPS growth has been positive, suggesting that the share price has diverged from fundamentals. Shareholders may want to question the board on the future direction of the company at the upcoming AGM on 20th of June. 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 Solomon Systech (International)

How Does Total Compensation For Raymond Wang Compare With Other Companies In The Industry?

Our data indicates that Solomon Systech (International) Limited has a market capitalization of HK$898m, and total annual CEO compensation was reported as US$772k for the year to December 2023. That's mostly flat as compared to the prior year's compensation. In particular, the salary of US$680.0k, makes up a huge portion of the total compensation being paid to the CEO.

On comparing similar-sized companies in the Hong Kong Semiconductor industry with market capitalizations below HK$1.6b, we found that the median total CEO compensation was US$293k. This suggests that Raymond Wang is paid more than the median for the industry. Furthermore, Raymond Wang directly owns HK$2.0m worth of shares in the company.

Component	2023	2022	Proportion (2023)
Salary	US$680k	US$659k	88%
Other	US$92k	US$97k	12%
Total Compensation	US$772k	US$756k	100%

Speaking on an industry level, nearly 78% of total compensation represents salary, while the remainder of 22% is other remuneration. Solomon Systech (International) is paying a higher share of its remuneration through a salary in comparison to the overall industry. 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 Solomon Systech (International) Limited's Growth Numbers

Over the past three years, Solomon Systech (International) Limited has seen its earnings per share (EPS) grow by 18% per year. In the last year, its revenue is down 20%.

Shareholders would be glad to know that the company has improved itself over the last few years. The lack of revenue growth isn't ideal, but it is the bottom line that counts most in business. 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 Solomon Systech (International) Limited Been A Good Investment?

The return of -56% over three years would not have pleased Solomon Systech (International) Limited shareholders. 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. 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.

Shareholders may want to check for free if Solomon Systech (International) insiders are buying or selling shares.

Switching gears from Solomon Systech (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.

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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.