GCL Technology Holdings Limited's (HKG:3800) CEO Compensation Is Looking A Bit Stretched At The Moment

Key Insights

• GCL Technology Holdings to hold its Annual General Meeting on 31st of May
• Salary of CN¥4.01m is part of CEO Zhanjun Zhu's total remuneration
• The total compensation is 541% higher than the average for the industry
• GCL Technology Holdings' EPS grew by 75% over the past three years while total shareholder loss over the past three years was 26%

In the past three years, the share price of GCL Technology Holdings Limited (HKG:3800) has struggled to grow and now shareholders are sitting on a loss. 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 31st of May. Voting on resolutions such as executive remuneration and other matters could also be a way to influence management. Here's our take on why we think shareholders may want to be cautious of approving a raise for the CEO at the moment.

Check out our latest analysis for GCL Technology Holdings

Comparing GCL Technology Holdings Limited's CEO Compensation With The Industry

According to our data, GCL Technology Holdings Limited has a market capitalization of HK$37b, and paid its CEO total annual compensation worth CN¥26m over the year to December 2023. We note that's an increase of 34% above last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at CN¥4.0m.

On comparing similar companies from the Hong Kong Semiconductor industry with market caps ranging from HK$16b to HK$50b, we found that the median CEO total compensation was CN¥4.1m. Accordingly, our analysis reveals that GCL Technology Holdings Limited pays Zhanjun Zhu north of the industry median. Moreover, Zhanjun Zhu also holds HK$4.7m worth of GCL Technology Holdings stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component	2023	2022	Proportion (2023)
Salary	CN¥4.0m	CN¥4.0m	15%
Other	CN¥22m	CN¥16m	85%
Total Compensation	CN¥26m	CN¥20m	100%

Speaking on an industry level, nearly 68% of total compensation represents salary, while the remainder of 32% is other remuneration. GCL Technology Holdings pays a modest slice of remuneration through salary, as compared to the broader industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

GCL Technology Holdings Limited's Growth

Over the past three years, GCL Technology Holdings Limited has seen its earnings per share (EPS) grow by 75% per year. It saw its revenue drop 6.2% over the last year.

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. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has GCL Technology Holdings Limited Been A Good Investment?

With a three year total loss of 26% for the shareholders, GCL Technology Holdings Limited would certainly have some dissatisfied 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. The stock's movement is disjointed with the company's earnings growth, which ideally should move in the same direction. Shareholders would be keen to know what's holding the stock back when earnings have grown. 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. That's why we did our research, and identified 2 warning signs for GCL Technology Holdings (of which 1 is a bit unpleasant!) that you should know about in order to have a holistic understanding of the stock.

Switching gears from GCL Technology 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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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.