Should Shareholders Have Second Thoughts About A Pay Rise For Shuoao International Holdings Limited's (HKG:2336) CEO This Year?

Key Insights

• Shuoao International Holdings will host its Annual General Meeting on 17th of June
• Total pay for CEO Luming Feng includes HK$538.0k salary
• The overall pay is 77% below the industry average
• Shuoao International Holdings' three-year loss to shareholders was 44% while its EPS was down 6.3% over the past three years

The underwhelming performance at Shuoao International Holdings Limited (HKG:2336) recently has probably not pleased shareholders. At the upcoming AGM on 17th of June, shareholders may have the opportunity to influence management to turn the performance around by voting on resolutions such as executive remuneration and other matters. The data we gathered below shows that CEO compensation looks acceptable for now.

View our latest analysis for Shuoao International Holdings

How Does Total Compensation For Luming Feng Compare With Other Companies In The Industry?

At the time of writing, our data shows that Shuoao International Holdings Limited has a market capitalization of HK$232m, and reported total annual CEO compensation of HK$556k for the year to December 2023. This was the same as last year. Notably, the salary which is HK$538.0k, 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 HK$2.4m. In other words, Shuoao International Holdings pays its CEO lower than the industry median.

Component	2023	2022	Proportion (2023)
Salary	HK$538k	HK$538k	97%
Other	HK$18k	HK$18k	3%
Total Compensation	HK$556k	HK$556k	100%

Speaking on an industry level, nearly 79% of total compensation represents salary, while the remainder of 21% is other remuneration. Shuoao International Holdings pays a high salary, concentrating more on this aspect of compensation in comparison to non-salary pay. 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.

A Look at Shuoao International Holdings Limited's Growth Numbers

Shuoao International Holdings Limited has reduced its earnings per share by 6.3% a year over the last three years. It achieved revenue growth of 12% over the last year.

Overall this is not a very positive result for shareholders. And while it's good to see some good revenue growth recently, the growth isn't really fast enough for us to put aside my concerns around EPS. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Shuoao International Holdings Limited Been A Good Investment?

The return of -44% over three years would not have pleased Shuoao International Holdings Limited shareholders. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

To Conclude...

Luming receives almost all of their compensation through a salary. Given that shareholders haven't seen any positive returns on their investment, not to mention the lack of earnings growth, this may suggest that few of them would be willing to award the CEO with a pay rise. At the upcoming AGM, they can question the management's plans and strategies to turn performance around and reassess their investment thesis in regards to the company.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. In our study, we found 2 warning signs for Shuoao International Holdings you should be aware of, and 1 of them is potentially serious.

Switching gears from Shuoao International 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.