Should Shareholders Worry About Tongda Group Holdings Limited's (HKG:698) CEO Compensation Package?

Performance at Tongda Group Holdings Limited (HKG:698) has not been particularly rosy recently and shareholders will likely be holding CEO Ya Nan Wang and the board accountable for this. The next AGM coming up on 14 May 2021 will be a chance for shareholders to have their concerns addressed by the board, challenge management on company strategy and vote on resolutions such as executive remuneration, which may help change the company's future prospects. We think most shareholders will probably pass the CEO compensation, based on what we gathered.

See our latest analysis for Tongda Group Holdings

Comparing Tongda Group Holdings Limited's CEO Compensation With the industry

According to our data, Tongda Group Holdings Limited has a market capitalization of HK$3.6b, and paid its CEO total annual compensation worth HK$1.3m over the year to December 2020. This was the same amount the CEO received in the prior year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at HK$360k.

On examining similar-sized companies in the industry with market capitalizations between HK$1.6b and HK$6.2b, we discovered that the median CEO total compensation of that group was HK$1.9m. In other words, Tongda Group Holdings pays its CEO lower than the industry median. Furthermore, Ya Nan Wang directly owns HK$401m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2020	2019	Proportion (2020)
Salary	HK$360k	HK$360k	28%
Other	HK$930k	HK$930k	72%
Total Compensation	HK$1.3m	HK$1.3m	100%

On an industry level, roughly 76% of total compensation represents salary and 24% is other remuneration. Tongda Group Holdings sets aside a smaller share of compensation for salary, in comparison to the overall industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

A Look at Tongda Group Holdings Limited's Growth Numbers

Over the last three years, Tongda Group Holdings Limited has shrunk its earnings per share by 31% per year. In the last year, its revenue is up 6.2%.

The decline in EPS is a bit concerning. And the modest revenue growth over 12 months isn't much comfort against the reduced EPS. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Tongda Group Holdings Limited Been A Good Investment?

With a total shareholder return of -69% over three years, Tongda Group Holdings Limited shareholders would by and large be disappointed. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

Not only have shareholders not seen a favorable return on their investment, but the business hasn't performed well either. Few shareholders would be willing to award the CEO with a pay raise. 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.

CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. That's why we did some digging and identified 2 warning signs for Tongda Group Holdings that you should be aware of before investing.

Important note: Tongda Group Holdings is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.

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