Shareholders May Be A Bit More Conservative With Yu Tak International Holdings Limited's (HKG:8048) CEO Compensation For Now

Shareholders of Yu Tak International Holdings Limited (HKG:8048) will have been dismayed by the negative share price return over the last three years. What is concerning is that despite positive EPS growth, the share price has not tracked the trend in fundamentals. These are some of the concerns that shareholders may want to bring up at the next AGM held on 21 May 2021. 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.

View our latest analysis for Yu Tak International Holdings

Comparing Yu Tak International Holdings Limited's CEO Compensation With the industry

Our data indicates that Yu Tak International Holdings Limited has a market capitalization of HK$99m, and total annual CEO compensation was reported as HK$1.1m for the year to December 2020. We note that's a small decrease of 3.7% on last year. In particular, the salary of HK$984.0k, makes up a huge portion of the total compensation being paid to the CEO.

In comparison with other companies in the industry with market capitalizations under HK$1.6b, the reported median total CEO compensation was HK$1.1m. From this we gather that Xia Li is paid around the median for CEOs in the industry.

Component	2020	2019	Proportion (2020)
Salary	HK$984k	HK$985k	91%
Other	HK$100k	HK$141k	9%
Total Compensation	HK$1.1m	HK$1.1m	100%

On an industry level, roughly 80% of total compensation represents salary and 20% is other remuneration. Yu Tak International Holdings pays out 91% of remuneration in the form of a salary, significantly higher than the industry average. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

Yu Tak International Holdings Limited's Growth

Over the past three years, Yu Tak International Holdings Limited has seen its earnings per share (EPS) grow by 40% per year. It saw its revenue drop 50% over the last year.

This demonstrates that the company has been improving recently and is good news for the shareholders. The lack of revenue growth isn't ideal, but it is the bottom line that counts most in business. 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 Yu Tak International Holdings Limited Been A Good Investment?

The return of -30% over three years would not have pleased Yu Tak International Holdings Limited shareholders. So shareholders would probably want the company to be less generous with CEO compensation.

In Summary...

Despite the growth in its earnings, the share price decline in the past three years is certainly concerning. The stock's movement is disjointed with the company's earnings growth, which ideally should move in the same direction. Shareholders would probably be keen to find out what are the other factors could be weighing down the stock. These concerns should be addressed at the upcoming AGM, where shareholders can question the board and evaluate if their judgement and decision making is still in line with their expectations.

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 Yu Tak International Holdings that investors should think about before committing capital to this stock.

Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies that have HIGH return on equity and low debt.

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This article by Simply Wall St is general in nature. 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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