It's Unlikely That The CEO Of Huabang Technology Holdings Limited (HKG:3638) Will See A Huge Pay Rise This Year

In the past three years, the share price of Huabang Technology Holdings Limited (HKG:3638) has struggled to grow and now shareholders are sitting on a loss. In addition, the company's per-share earnings growth is not looking good, despite growing revenues. In light of this performance, shareholders will have a chance to question the board in the upcoming AGM on 25 August 2021, where they can impact on future company performance by voting on resolutions, including executive compensation. Here's our take on why we think shareholders might be hesitant about approving a raise at the moment.

See our latest analysis for Huabang Technology Holdings

How Does Total Compensation For Lu George Compare With Other Companies In The Industry?

At the time of writing, our data shows that Huabang Technology Holdings Limited has a market capitalization of HK$526m, and reported total annual CEO compensation of HK$2.4m for the year to March 2021. That's a notable increase of 33% on last year. In particular, the salary of HK$2.30m, makes up a huge portion of the total compensation being paid to the CEO.

In comparison with other companies in the industry with market capitalizations under HK$1.6b, the reported median total CEO compensation was HK$2.2m. From this we gather that Lu George is paid around the median for CEOs in the industry.

Component	2021	2020	Proportion (2021)
Salary	HK$2.3m	HK$1.7m	95%
Other	HK$118k	HK$118k	5%
Total Compensation	HK$2.4m	HK$1.8m	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. Huabang Technology Holdings pays a high salary, concentrating more on this aspect of compensation in comparison to non-salary pay. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

A Look at Huabang Technology Holdings Limited's Growth Numbers

Huabang Technology Holdings Limited has reduced its earnings per share by 51% a year over the last three years. Its revenue is up 117% over the last year.

Investors would be a bit wary of companies that have lower EPS But on the other hand, revenue growth is strong, suggesting a brighter future. In conclusion we can't form a strong opinion about business performance yet; but it's one worth watching. 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 Huabang Technology Holdings Limited Been A Good Investment?

The return of -79% over three years would not have pleased Huabang Technology Holdings Limited shareholders. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

Lu receives almost all of their compensation through a salary. The returns to shareholders is disappointing along with lack of earnings growth, which goes some way in explaining the poor returns. The upcoming AGM will provide shareholders the opportunity to revisit the company’s remuneration policies and evaluate if the board’s judgement and decision-making is aligned with that of the company’s shareholders.

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. That's why we did our research, and identified 4 warning signs for Huabang Technology Holdings (of which 2 are a bit unpleasant!) that you should know about in order to have a holistic understanding of the stock.

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.
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