InvesTech Holdings Limited's (HKG:1087) CEO Compensation Is Looking A Bit Stretched At The Moment

Key Insights

• InvesTech Holdings to hold its Annual General Meeting on 31st of May
• Total pay for CEO Ringo Chan includes CN¥2.87m salary
• The overall pay is 91% above the industry average
• InvesTech Holdings' three-year loss to shareholders was 79% while its EPS grew by 29% over the past three years

Shareholders of InvesTech Holdings Limited (HKG:1087) 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. Shareholders may want to question the board on the future direction of the company at the upcoming AGM on 31st of May. They could also try to influence management and firm direction through voting on resolutions such as executive remuneration and other company matters. We discuss below why we think shareholders should be cautious of approving a raise for the CEO at the moment.

View our latest analysis for InvesTech Holdings

Comparing InvesTech Holdings Limited's CEO Compensation With The Industry

Our data indicates that InvesTech Holdings Limited has a market capitalization of HK$68m, and total annual CEO compensation was reported as CN¥3.0m for the year to December 2023. Notably, that's a decrease of 20% over the year before. Notably, the salary which is CN¥2.87m, represents most of the total compensation being paid.

For comparison, other companies in the Hong Kong Communications industry with market capitalizations below HK$1.6b, reported a median total CEO compensation of CN¥1.6m. Accordingly, our analysis reveals that InvesTech Holdings Limited pays Ringo Chan north of the industry median. Moreover, Ringo Chan also holds HK$1.8m worth of InvesTech Holdings stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component	2023	2022	Proportion (2023)
Salary	CN¥2.9m	CN¥3.6m	96%
Other	CN¥125k	CN¥134k	4%
Total Compensation	CN¥3.0m	CN¥3.8m	100%

On an industry level, around 77% of total compensation represents salary and 23% is other remuneration. InvesTech Holdings has gone down a largely traditional route, paying Ringo Chan 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 InvesTech Holdings Limited's Growth Numbers

Over the past three years, InvesTech Holdings Limited has seen its earnings per share (EPS) grow by 29% per year. Revenue was pretty flat on last year.

This demonstrates that the company has been improving recently and is good news for the shareholders. It's nice to see revenue heading northwards, as this is consistent with healthy business conditions. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has InvesTech Holdings Limited Been A Good Investment?

The return of -79% over three years would not have pleased InvesTech Holdings Limited shareholders. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

In Summary...

Ringo receives almost all of their compensation through a salary. The fact that shareholders are sitting on a loss on the value of their shares in the past few years is certainly disconcerting. 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 can have a massive impact on performance, but it's just one element. We've identified 3 warning signs for InvesTech Holdings that investors should be aware of in a dynamic business environment.

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. 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.