Here's Why Shareholders May Want To Be Cautious With Increasing Microware Group Limited's (HKG:1985) CEO Pay Packet

Performance at Microware Group Limited (HKG:1985) has been reasonably good and CEO Ming Ho Chu has done a decent job of steering the company in the right direction. As shareholders go into the upcoming AGM on 24 August 2021, CEO compensation will probably not be their focus, but rather the steps management will take to continue the growth momentum. However, some shareholders may still be hesitant of being overly generous with CEO compensation.

Check out our latest analysis for Microware Group

Comparing Microware Group Limited's CEO Compensation With the industry

At the time of writing, our data shows that Microware Group Limited has a market capitalization of HK$282m, and reported total annual CEO compensation of HK$4.7m for the year to March 2021. We note that's a small decrease of 6.7% on last year. In particular, the salary of HK$3.20m, makes up a huge portion of the total compensation being paid to the CEO.

On comparing similar-sized companies in the industry with market capitalizations below HK$1.6b, we found that the median total CEO compensation was HK$1.8m. Accordingly, our analysis reveals that Microware Group Limited pays Ming Ho Chu north of the industry median. What's more, Ming Ho Chu holds HK$11m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component	2021	2020	Proportion (2021)
Salary	HK$3.2m	HK$3.0m	68%
Other	HK$1.5m	HK$2.0m	32%
Total Compensation	HK$4.7m	HK$5.0m	100%

On an industry level, around 69% of total compensation represents salary and 31% is other remuneration. Our data reveals that Microware Group allocates salary more or less in line with the wider market. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

A Look at Microware Group Limited's Growth Numbers

Over the past three years, Microware Group Limited has seen its earnings per share (EPS) grow by 16% per year. It saw its revenue drop 18% over the last year.

This demonstrates that the company has been improving recently and is good news for the shareholders. While it would be good to see revenue growth, profits matter more in the end. We don't have analyst forecasts, but you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.

Has Microware Group Limited Been A Good Investment?

Microware Group Limited has not done too badly by shareholders, with a total return of 9.8%, over three years. It would be nice to see that metric improve in the future. In light of that, investors might probably want to see an improvement on their returns before they feel generous about increasing the CEO remuneration.

In Summary...

Seeing that the company has put up a decent performance, only a few shareholders, if any at all, might have questions about the CEO pay in the upcoming AGM. However, any decision to raise CEO pay might be met with some objections from the shareholders given that the CEO is already paid higher than the industry average.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. That's why we did some digging and identified 2 warning signs for Microware Group that investors should think about before committing capital to this stock.

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.
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