It Looks Like Expert Systems Holdings Limited's (HKG:8319) CEO May Expect Their Salary To Be Put Under The Microscope

Key Insights

• Expert Systems Holdings to hold its Annual General Meeting on 17th of September
• CEO Andy Lau's total compensation includes salary of HK$2.45m
• Total compensation is 95% above industry average
• Expert Systems Holdings' three-year loss to shareholders was 14% while its EPS was down 11% over the past three years

Shareholders will probably not be too impressed with the underwhelming results at Expert Systems Holdings Limited (HKG:8319) recently. Shareholders can take the chance to hold the board and management accountable for the unsatisfactory performance at the next AGM on 17th of September. It would also be an opportunity for shareholders to influence management through voting on company resolutions such as executive remuneration, which could impact the firm significantly. From our analysis, we think CEO compensation may need a review in light of the recent performance.

See our latest analysis for Expert Systems Holdings

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

At the time of writing, our data shows that Expert Systems Holdings Limited has a market capitalization of HK$88m, and reported total annual CEO compensation of HK$2.6m for the year to March 2024. That's just a smallish increase of 6.9% on last year. Notably, the salary which is HK$2.45m, represents most of the total compensation being paid.

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. This suggests that Andy Lau is paid more than the median for the industry. Furthermore, Andy Lau directly owns HK$11m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2024	2023	Proportion (2024)
Salary	HK$2.5m	HK$2.3m	93%
Other	HK$177k	HK$209k	7%
Total Compensation	HK$2.6m	HK$2.5m	100%

Speaking on an industry level, nearly 88% of total compensation represents salary, while the remainder of 12% is other remuneration. Expert Systems Holdings is largely mirroring the industry average when it comes to the share a salary enjoys in overall compensation. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

Expert Systems Holdings Limited's Growth

Over the last three years, Expert Systems Holdings Limited has shrunk its earnings per share by 11% per year. It achieved revenue growth of 12% over the last year.

The decline in EPS is a bit concerning. And while it's good to see some good revenue growth recently, the growth isn't really fast enough for us to put aside my concerns around EPS. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Expert Systems Holdings Limited Been A Good Investment?

Given the total shareholder loss of 14% over three years, many shareholders in Expert Systems Holdings Limited are probably rather dissatisfied, to say the least. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

Along with the business performing poorly, shareholders have suffered with poor share price returns on their investments, suggesting that there's little to no chance of them being in favor of a CEO pay raise. At the upcoming AGM, they can question the management's plans and strategies to turn performance around and reassess their investment thesis in regards to the company.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. We did our research and spotted 3 warning signs for Expert Systems Holdings that investors should look into moving forward.

Switching gears from Expert Systems Holdings, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.

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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.