The results at Vision Values Holdings Limited (HKG:862) have been quite disappointing recently and CEO Simon Lo bears some responsibility for this. Shareholders can take the chance to hold the board and management accountable for the unsatisfactory performance at the next AGM on 24 November 2021. This will be also be a chance where they can challenge the board on company direction and vote on resolutions such as executive remuneration. We present the case why we think CEO compensation is out of sync with company performance.
How Does Total Compensation For Simon Lo Compare With Other Companies In The Industry?
Our data indicates that Vision Values Holdings Limited has a market capitalization of HK$903m, and total annual CEO compensation was reported as HK$6.1m for the year to June 2021. Notably, that's a decrease of 29% over the year before. Notably, the salary which is HK$6.00m, represents most of the total compensation being paid.
In comparison with other companies in the industry with market capitalizations under HK$1.6b, the reported median total CEO compensation was HK$1.9m. This suggests that Simon Lo is paid more than the median for the industry. Furthermore, Simon Lo directly owns HK$287m worth of shares in the company, implying that they are deeply invested in the company's success.
Talking in terms of the industry, salary represented approximately 68% of total compensation out of all the companies we analyzed, while other remuneration made up 32% of the pie. Vision Values Holdings has gone down a largely traditional route, paying Simon Lo a high salary, giving it preference over non-salary benefits. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.
A Look at Vision Values Holdings Limited's Growth Numbers
Vision Values Holdings Limited has reduced its earnings per share by 54% a year over the last three years. Its revenue is down 15% over the previous year.
Few shareholders would be pleased to read that EPS have declined. And the fact that revenue is down year on year arguably paints an ugly picture. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. 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 Vision Values Holdings Limited Been A Good Investment?
With a total shareholder return of -43% over three years, Vision Values Holdings Limited shareholders would by and large be disappointed. This suggests it would be unwise for the company to pay the CEO too generously.
Vision Values Holdings pays its CEO a majority of compensation through a salary. 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, management will get a chance to explain how they plan to get the business back on track and address the concerns from investors.
CEO pay is simply one of the many factors that need to be considered while examining business performance. That's why we did our research, and identified 3 warning signs for Vision Values Holdings (of which 2 are significant!) that you should know about in order to have a holistic understanding of the stock.
Switching gears from Vision Values 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.
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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