Should Shareholders Reconsider Truly International Holdings Limited's (HKG:732) CEO Compensation Package?

Key Insights

• Truly International Holdings will host its Annual General Meeting on 13th of May
• Salary of HK$3.97m is part of CEO Steven Lam's total remuneration
• The overall pay is 130% above the industry average
• Over the past three years, Truly International Holdings' EPS fell by 18% and over the past three years, the total loss to shareholders 9.1%

The results at Truly International Holdings Limited (HKG:732) have been quite disappointing recently and CEO Steven Lam bears some responsibility for this. Shareholders can take the chance to hold the board and management accountable for the unsatisfactory performance at the next AGM on 13th of May. It would also be an opportunity for shareholders to influence management through voting on company resolutions such as executive remuneration, which could impact the firm significantly. The data we present below explains why we think CEO compensation is not consistent with recent performance.

View our latest analysis for Truly International Holdings

How Does Total Compensation For Steven Lam Compare With Other Companies In The Industry?

At the time of writing, our data shows that Truly International Holdings Limited has a market capitalization of HK$2.8b, and reported total annual CEO compensation of HK$12m for the year to December 2023. Notably, that's a decrease of 12% over the year before. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at HK$4.0m.

For comparison, other companies in the Hong Kong Electronic industry with market capitalizations ranging between HK$1.6b and HK$6.3b had a median total CEO compensation of HK$5.3m. Hence, we can conclude that Steven Lam is remunerated higher than the industry median. Moreover, Steven Lam also holds HK$1.4b worth of Truly 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$4.0m	HK$4.0m	32%
Other	HK$8.3m	HK$9.9m	68%
Total Compensation	HK$12m	HK$14m	100%

Speaking on an industry level, nearly 78% of total compensation represents salary, while the remainder of 22% is other remuneration. It's interesting to note that Truly International Holdings allocates a smaller portion of compensation to salary in comparison to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

A Look at Truly International Holdings Limited's Growth Numbers

Truly International Holdings Limited has reduced its earnings per share by 18% a year over the last three years. In the last year, its revenue is down 19%.

Few shareholders would be pleased to read that EPS have declined. This is compounded by the fact revenue is actually down on last year. 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 Truly International Holdings Limited Been A Good Investment?

With a three year total loss of 9.1% for the shareholders, Truly International Holdings Limited would certainly have some dissatisfied shareholders. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

To Conclude...

Along with the business performing poorly, shareholders have suffered with poor share price returns on their investments, suggesting that there's little to no chance of them being in favor of a CEO pay raise. At the upcoming AGM, management will get a chance to explain how they plan to get the business back on track and address the concerns from investors.

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. We identified 3 warning signs for Truly International Holdings (1 is significant!) that you should be aware of before investing here.

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.