The performance at IBO Technology Company Limited (HKG:2708) has been rather lacklustre of late and shareholders may be wondering what CEO Weilong Gao is planning to do about this. One way they can exercise their influence on management is through voting on resolutions, such as executive remuneration at the next AGM, coming up on 30 September 2021. Voting on executive pay could be a powerful way to influence management, as studies have shown that the right compensation incentives impact company performance. We have prepared some analysis below to show that CEO compensation looks to be reasonable.
Comparing IBO Technology Company Limited's CEO Compensation With the industry
According to our data, IBO Technology Company Limited has a market capitalization of HK$1.6b, and paid its CEO total annual compensation worth CN¥1.1m over the year to March 2021. Notably, that's a decrease of 33% over the year before. We think total compensation is more important but our data shows that the CEO salary is lower, at CN¥518k.
On examining similar-sized companies in the industry with market capitalizations between HK$779m and HK$3.1b, we discovered that the median CEO total compensation of that group was CN¥3.5m. This suggests that Weilong Gao is paid below the industry median.
On an industry level, roughly 83% of total compensation represents salary and 17% is other remuneration. It's interesting to note that IBO Technology allocates a smaller portion of compensation to salary in comparison to the broader industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.
IBO Technology Company Limited's Growth
IBO Technology Company Limited has reduced its earnings per share by 105% a year over the last three years. In the last year, its revenue is up 15%.
Overall this is not a very positive result for shareholders. There's no doubt that the silver lining is that revenue is up. But it isn't sufficiently fast growth to overlook the fact that EPS has gone backwards over three years. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. 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 IBO Technology Company Limited Been A Good Investment?
We think that the total shareholder return of 53%, over three years, would leave most IBO Technology Company Limited shareholders smiling. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.
While the return to shareholders does look promising, it's hard to ignore the lack of earnings growth and this makes us wonder if these strong returns can continue. These are are some concerns that shareholders may want to address the board when they revisit their investment thesis.
It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. We did our research and identified 4 warning signs (and 1 which is concerning) in IBO Technology we think you should know about.
Switching gears from IBO Technology, 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.
If you're looking for stocks to buy, use the lowest-cost* platform that is rated #1 Overall by Barron’s, Interactive Brokers. Trade stocks, options, futures, forex, bonds and funds on 135 markets, all from a single integrated account. Promoted
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.
*Interactive Brokers Rated Lowest Cost Broker by StockBrokers.com Annual Online Review 2020
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.