Should Shareholders Reconsider Wong's Kong King International (Holdings) Limited's (HKG:532) CEO Compensation Package?

Key Insights

• Wong's Kong King International (Holdings) will host its Annual General Meeting on 25th of June
• Salary of HK$6.03m is part of CEO Edward Tsui's total remuneration
• The total compensation is 178% higher than the average for the industry
• Wong's Kong King International (Holdings)'s three-year loss to shareholders was 65% while its EPS was down 91% over the past three years

Wong's Kong King International (Holdings) Limited (HKG:532) has not performed well recently and CEO Edward Tsui will probably need to up their game. Shareholders will be interested in what the board will have to say about turning performance around at the next AGM on 25th of June. This will be also be a chance where they can challenge the board on company direction and vote on resolutions such as executive remuneration. We present the case why we think CEO compensation is out of sync with company performance.

Check out our latest analysis for Wong's Kong King International (Holdings)

Comparing Wong's Kong King International (Holdings) Limited's CEO Compensation With The Industry

At the time of writing, our data shows that Wong's Kong King International (Holdings) Limited has a market capitalization of HK$336m, and reported total annual CEO compensation of HK$6.6m for the year to December 2023. That's a notable decrease of 12% on last year. In particular, the salary of HK$6.03m, makes up a huge portion of the total compensation being paid to the CEO.

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. This suggests that Edward Tsui is paid more than the median for the industry. Moreover, Edward Tsui also holds HK$3.5m worth of Wong's Kong King International (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	HK$6.0m	HK$5.8m	91%
Other	HK$568k	HK$1.7m	9%
Total Compensation	HK$6.6m	HK$7.5m	100%

Speaking on an industry level, nearly 79% of total compensation represents salary, while the remainder of 21% is other remuneration. Wong's Kong King International (Holdings) pays out 91% of remuneration in the form of a salary, significantly higher than the industry average. 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.

Wong's Kong King International (Holdings) Limited's Growth

Over the last three years, Wong's Kong King International (Holdings) Limited has shrunk its earnings per share by 91% per year. Its revenue is down 21% over the previous year.

Few shareholders would be pleased to read that EPS have declined. And the fact that revenue is down year on year arguably paints an ugly picture. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. We don't have analyst forecasts, but you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.

Has Wong's Kong King International (Holdings) Limited Been A Good Investment?

Few Wong's Kong King International (Holdings) Limited shareholders would feel satisfied with the return of -65% over three years. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

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, the board will get the chance to explain the steps it plans to take to improve business performance.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. That's why we did our research, and identified 2 warning signs for Wong's Kong King International (Holdings) (of which 1 is potentially serious!) 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com