Shareholders Will Probably Hold Off On Increasing Automated Systems Holdings Limited's (HKG:771) CEO Compensation For The Time Being

Key Insights

• Automated Systems Holdings' Annual General Meeting to take place on 29th of May
• Salary of HK$2.70m is part of CEO Leon Wang's total remuneration
• The total compensation is 596% higher than the average for the industry
• Automated Systems Holdings' EPS grew by 73% over the past three years while total shareholder loss over the past three years was 30%

Shareholders of Automated Systems Holdings Limited (HKG:771) 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. These are some of the concerns that shareholders may want to bring up at the next AGM held on 29th of May. They could also influence management through voting on resolutions such as executive remuneration. 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 Automated Systems Holdings

Comparing Automated Systems Holdings Limited's CEO Compensation With The Industry

At the time of writing, our data shows that Automated Systems Holdings Limited has a market capitalization of HK$550m, and reported total annual CEO compensation of HK$8.9m for the year to December 2023. We note that's a small decrease of 3.7% on last year. We think total compensation is more important but our data shows that the CEO salary is lower, at HK$2.7m.

For comparison, other companies in the Hong Kong IT industry with market capitalizations below HK$1.6b, reported a median total CEO compensation of HK$1.3m. Accordingly, our analysis reveals that Automated Systems Holdings Limited pays Leon Wang north of the industry median.

Component	2023	2022	Proportion (2023)
Salary	HK$2.7m	HK$2.7m	30%
Other	HK$6.2m	HK$6.5m	70%
Total Compensation	HK$8.9m	HK$9.2m	100%

On an industry level, around 88% of total compensation represents salary and 12% is other remuneration. Automated Systems 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.

Automated Systems Holdings Limited's Growth

Automated Systems Holdings Limited has seen its earnings per share (EPS) increase by 73% a year over the past three years. In the last year, its revenue is up 6.5%.

This demonstrates that the company has been improving recently and is good news for the shareholders. It's nice to see revenue heading northwards, as this is consistent with healthy business conditions. 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 Automated Systems Holdings Limited Been A Good Investment?

With a three year total loss of 30% for the shareholders, Automated Systems Holdings Limited would certainly have some dissatisfied shareholders. This suggests it would be unwise for the company to pay the CEO too 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 fact that the stock price hasn't grown along with earnings may indicate that other issues may be affecting that stock. If there are some unknown variables that are influencing the stock's price, surely shareholders would have some concerns. At the upcoming AGM, shareholders will get the opportunity to discuss any issues with the board, including those related to CEO remuneration and assess if the board's plan will likely improve performance in the future.

CEO compensation can have a massive impact on performance, but it's just one element. We did our research and spotted 3 warning signs for Automated Systems Holdings that investors should look into moving forward.

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.