Here's Why Edensoft Holdings Limited's (HKG:1147) CEO Compensation Is The Least Of Shareholders' Concerns

Key Insights

• Edensoft Holdings to hold its Annual General Meeting on 23rd of May
• CEO Xinyun Ding's total compensation includes salary of CN¥36.0k
• The overall pay is comparable to the industry average
• Edensoft Holdings' total shareholder return over the past three years was 22% while its EPS was down 26% over the past three years

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Performance at Edensoft Holdings Limited (HKG:1147) has been reasonably good and CEO Xinyun Ding has done a decent job of steering the company in the right direction. As shareholders go into the upcoming AGM on 23rd of May, CEO compensation will probably not be their focus, but rather the steps management will take to continue the growth momentum. Based on our analysis of the data below, we think CEO compensation seems reasonable for now.

Check out our latest analysis for Edensoft Holdings

Comparing Edensoft Holdings Limited's CEO Compensation With The Industry

At the time of writing, our data shows that Edensoft Holdings Limited has a market capitalization of HK$235m, and reported total annual CEO compensation of CN¥1.1m for the year to December 2024. That's mostly flat as compared to the prior year's compensation. While we always look at total compensation first, our analysis shows that the salary component is less, at CN¥36k.

In comparison with other companies in the Hong Kong IT industry with market capitalizations under HK$1.6b, the reported median total CEO compensation was CN¥1.6m. So it looks like Edensoft Holdings compensates Xinyun Ding in line with the median for the industry.

On an industry level, roughly 82% of total compensation represents salary and 18% is other remuneration. Interestingly, the company has chosen to go down an unconventional route in that it pays a smaller salary to Xinyun Ding as compared to non-salary compensation over the one-year period examined. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

A Look at Edensoft Holdings Limited's Growth Numbers

Over the last three years, Edensoft Holdings Limited has shrunk its earnings per share by 26% per year. It achieved revenue growth of 39% over the last year.

The reduction in EPS, over three years, is arguably concerning. But in contrast the revenue growth is strong, suggesting future potential for EPS growth. In conclusion we can't form a strong opinion about business performance yet; but it's one worth watching. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Edensoft Holdings Limited Been A Good Investment?

Edensoft Holdings Limited has generated a total shareholder return of 22% over three years, so most shareholders would be reasonably content. But they probably don't want to see the CEO paid more than is normal for companies around the same size.

To Conclude...

Edensoft Holdings primarily uses non-salary benefits to reward its CEO. Although the company has performed relatively well, we still think there are some areas that could be improved. Still, we think that until shareholders see an improvement in EPS growth, they may find it hard to justify a pay rise for the CEO.

CEO pay is simply one of the many factors that need to be considered while examining business performance. We identified 3 warning signs for Edensoft Holdings (2 make us uncomfortable!) that you should be aware of before investing here.

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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.