Shareholders May Find It Hard To Justify Increasing Solargiga Energy Holdings Limited's (HKG:757) CEO Compensation For Now

Key Insights

• Solargiga Energy Holdings will host its Annual General Meeting on 12th of June
• Total pay for CEO Xin Tan includes CN¥1.62m salary
• The total compensation is similar to the average for the industry
• Solargiga Energy Holdings' EPS grew by 7.1% over the past three years while total shareholder loss over the past three years was 55%

In the past three years, the share price of Solargiga Energy Holdings Limited (HKG:757) 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. Shareholders may want to question the board on the future direction of the company at the upcoming AGM on 12th 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 Solargiga Energy Holdings

Comparing Solargiga Energy Holdings Limited's CEO Compensation With The Industry

At the time of writing, our data shows that Solargiga Energy Holdings Limited has a market capitalization of HK$455m, and reported total annual CEO compensation of CN¥1.6m for the year to December 2023. We note that's an increase of 8.4% above last year. We note that the salary portion, which stands at CN¥1.62m constitutes the majority of total compensation received by the CEO.

In comparison with other companies in the Hong Kong Semiconductor industry with market capitalizations under HK$1.6b, the reported median total CEO compensation was CN¥2.1m. So it looks like Solargiga Energy Holdings compensates Xin Tan in line with the median for the industry. Moreover, Xin Tan also holds HK$5.7m worth of Solargiga Energy 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¥1.6m	CN¥1.5m	99%
Other	CN¥16k	CN¥15k	1%
Total Compensation	CN¥1.6m	CN¥1.5m	100%

On an industry level, roughly 78% of total compensation represents salary and 22% is other remuneration. Investors will find it interesting that Solargiga Energy Holdings pays the bulk of its rewards through a traditional salary, instead of non-salary benefits. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.

A Look at Solargiga Energy Holdings Limited's Growth Numbers

Over the past three years, Solargiga Energy Holdings Limited has seen its earnings per share (EPS) grow by 7.1% per year. Its revenue is up 4.7% over the last year.

We'd prefer higher revenue growth, but it is good to see modest EPS growth. It's clear the performance has been quite decent, but it it falls short of outstanding,based on this information. 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 Solargiga Energy Holdings Limited Been A Good Investment?

With a total shareholder return of -55% over three years, Solargiga Energy Holdings Limited shareholders would by and large be disappointed. So shareholders would probably want the company to be less generous with CEO compensation.

To Conclude...

Solargiga Energy Holdings pays its CEO a majority of compensation through a salary. 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. 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.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. We did our research and identified 3 warning signs (and 2 which are a bit concerning) in Solargiga Energy Holdings we think you should know about.

Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.

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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.