We Think Some Shareholders May Hesitate To Increase Anacle Systems Limited's (HKG:8353) CEO Compensation

In the past three years, the share price of Anacle Systems Limited (HKG:8353) has struggled to grow and now shareholders are sitting on a loss. Despite positive EPS growth in the past few years, the share price hasn't tracked the fundamental performance of the company. Shareholders may want to question the board on the future direction of the company at the upcoming AGM on 29 September 2021. 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 Anacle Systems

How Does Total Compensation For Alex Lau Compare With Other Companies In The Industry?

According to our data, Anacle Systems Limited has a market capitalization of HK$159m, and paid its CEO total annual compensation worth S$327k over the year to May 2021. That's a fairly small increase of 4.9% over the previous year. Notably, the salary which is S$310.7k, represents most of the total compensation being paid.

On comparing similar-sized companies in the industry with market capitalizations below HK$1.6b, we found that the median total CEO compensation was S$212k. Accordingly, our analysis reveals that Anacle Systems Limited pays Alex Lau north of the industry median. What's more, Alex Lau holds HK$18m 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	S$311k	S$296k	95%
Other	S$17k	S$16k	5%
Total Compensation	S$327k	S$312k	100%

On an industry level, around 84% of total compensation represents salary and 16% is other remuneration. Anacle Systems pays out 95% of remuneration in the form of a salary, significantly higher than the industry average. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.

Anacle Systems Limited's Growth

Over the past three years, Anacle Systems Limited has seen its earnings per share (EPS) grow by 96% per year. Its revenue is up 17% over the last year.

This demonstrates that the company has been improving recently and is good news for the shareholders. It's a real positive to see this sort of revenue growth in a single year. That suggests a healthy and growing 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 Anacle Systems Limited Been A Good Investment?

With a three year total loss of 28% for the shareholders, Anacle Systems Limited would certainly have some dissatisfied shareholders. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

In Summary...

Despite the growth in its earnings, the share price decline in the past three years is certainly concerning. A huge lag in share price growth when earnings have grown may indicate there could be other issues that are affecting the company at the moment that the market is focused on. 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 is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. We've identified 2 warning signs for Anacle Systems that investors should be aware of in a dynamic business environment.

Important note: Anacle Systems is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.

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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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