It's Probably Less Likely That Wai Chun Group Holdings Limited's (HKG:1013) CEO Will See A Huge Pay Rise This Year

Shareholders of Wai Chun Group Holdings Limited (HKG:1013) 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. Shareholders may want to question the board on the future direction of the company at the upcoming AGM on 11 August 2021. They could also influence management through voting on resolutions such as executive remuneration. 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 Wai Chun Group Holdings

Comparing Wai Chun Group Holdings Limited's CEO Compensation With the industry

According to our data, Wai Chun Group Holdings Limited has a market capitalization of HK$163m, and paid its CEO total annual compensation worth HK$2.6m over the year to March 2021. This was the same amount the CEO received in the prior year. In particular, the salary of HK$2.60m, makes up a huge portion of the total compensation being paid to the CEO.

For comparison, other companies in the industry with market capitalizations below HK$1.6b, reported a median total CEO compensation of HK$2.3m. So it looks like Wai Chun Group Holdings compensates Ching Kui Lam in line with the median for the industry. Moreover, Ching Kui Lam also holds HK$121m worth of Wai Chun Group Holdings stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component	2021	2020	Proportion (2021)
Salary	HK$2.6m	HK$2.4m	99%
Other	HK$18k	HK$218k	1%
Total Compensation	HK$2.6m	HK$2.6m	100%

Talking in terms of the industry, salary represented approximately 81% of total compensation out of all the companies we analyzed, while other remuneration made up 19% of the pie. Wai Chun Group Holdings has gone down a largely traditional route, paying Ching Kui Lam a high salary, giving it preference over non-salary benefits. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

Wai Chun Group Holdings Limited's Growth

Wai Chun Group Holdings Limited's earnings per share (EPS) grew 9.9% per year over the last three years. Its revenue is up 19% over the last year.

We think the revenue growth is good. And, while modest, the EPS growth is noticeable. Although we'll stop short of calling the stock a top performer, we think the company has potential. 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 Wai Chun Group Holdings Limited Been A Good Investment?

The return of -84% over three years would not have pleased Wai Chun Group Holdings Limited shareholders. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

Wai Chun Group Holdings pays its CEO a majority of compensation through a salary. Shareholders have not seen their shares grow in value, rather they have seen their shares decline. The fact that the stock price hasn't grown along with earnings may indicate that other issues may be affecting that stock. 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.

CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. We did our research and identified 3 warning signs (and 1 which shouldn't be ignored) in Wai Chun Group Holdings we think you should know about.

Switching gears from Wai Chun Group 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. 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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