SMIT Holdings Limited's (HKG:2239) CEO Compensation Is Looking A Bit Stretched At The Moment

Key Insights

• SMIT Holdings will host its Annual General Meeting on 31st of May
• Total pay for CEO Xueliang Huang includes US$387.6k salary
• Total compensation is 50% above industry average
• SMIT Holdings' EPS grew by 59% over the past three years while total shareholder loss over the past three years was 58%

Shareholders of SMIT Holdings Limited (HKG:2239) 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 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.

View our latest analysis for SMIT Holdings

How Does Total Compensation For Xueliang Huang Compare With Other Companies In The Industry?

At the time of writing, our data shows that SMIT Holdings Limited has a market capitalization of HK$455m, and reported total annual CEO compensation of US$455k for the year to December 2023. We note that's a decrease of 16% compared to last year. Notably, the salary which is US$387.6k, represents most of the total compensation being paid.

For comparison, other companies in the Hong Kong Electronic industry with market capitalizations below HK$1.6b, reported a median total CEO compensation of US$304k. This suggests that Xueliang Huang is paid more than the median for the industry. What's more, Xueliang Huang holds HK$256m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component	2023	2022	Proportion (2023)
Salary	US$388k	US$388k	85%
Other	US$67k	US$157k	15%
Total Compensation	US$455k	US$544k	100%

On an industry level, roughly 79% of total compensation represents salary and 21% is other remuneration. SMIT Holdings is largely mirroring the industry average when it comes to the share a salary enjoys in overall compensation. 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.

SMIT Holdings Limited's Growth

SMIT Holdings Limited's earnings per share (EPS) grew 59% per year over the last three years. Its revenue is down 24% over the previous year.

This demonstrates that the company has been improving recently and is good news for the shareholders. While it would be good to see revenue growth, profits matter more in the end. 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 SMIT Holdings Limited Been A Good Investment?

Few SMIT Holdings Limited shareholders would feel satisfied with the return of -58% over three years. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

The fact that shareholders are sitting on a loss on the value of their shares in the past few years is certainly disconcerting. The stock's movement is disjointed with the company's earnings growth, which ideally should move in the same direction. If there are some unknown variables that are influencing the stock's price, surely shareholders would have some concerns. 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.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. That's why we did some digging and identified 1 warning sign for SMIT Holdings that investors should think about before committing capital to this stock.

Switching gears from SMIT 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.