We Think Shareholders Are Less Likely To Approve A Pay Rise For Vodatel Networks Holdings Limited's (HKG:8033) CEO For Now

Shareholders of Vodatel Networks Holdings Limited (HKG:8033) will have been dismayed by the negative share price return over the last three years. Despite positive EPS growth in the past few years, the share price hasn't tracked the fundamental performance of the company. The AGM coming up on the 18 June 2021 could be an opportunity for shareholders to bring these concerns to the board's attention. They could also try to influence management and firm direction through voting on resolutions such as executive remuneration and other company matters. We discuss below why we think shareholders should be cautious of approving a raise for the CEO at the moment.

See our latest analysis for Vodatel Networks Holdings

Comparing Vodatel Networks Holdings Limited's CEO Compensation With the industry

Our data indicates that Vodatel Networks Holdings Limited has a market capitalization of HK$110m, and total annual CEO compensation was reported as HK$2.2m for the year to December 2020. That's a notable increase of 12% on last year. We note that the salary portion, which stands at HK$1.31m constitutes the majority of total compensation received by the CEO.

On comparing similar-sized companies in the industry with market capitalizations below HK$1.6b, we found that the median total CEO compensation was HK$2.2m. From this we gather that Kin Kuan is paid around the median for CEOs in the industry. What's more, Kin Kuan holds HK$4.0m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component	2020	2019	Proportion (2020)
Salary	HK$1.3m	HK$1.3m	61%
Other	HK$856k	HK$630k	39%
Total Compensation	HK$2.2m	HK$1.9m	100%

Speaking on an industry level, nearly 77% of total compensation represents salary, while the remainder of 23% is other remuneration. It's interesting to note that Vodatel Networks Holdings allocates a smaller portion of compensation to salary in comparison to the broader industry. 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 Vodatel Networks Holdings Limited's Growth Numbers

Vodatel Networks Holdings Limited's earnings per share (EPS) grew 32% per year over the last three years. It saw its revenue drop 20% over the last year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's always a tough situation when revenues are not growing, but ultimately profits are more important. 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 Vodatel Networks Holdings Limited Been A Good Investment?

Given the total shareholder loss of 26% over three years, many shareholders in Vodatel Networks Holdings Limited are probably rather dissatisfied, to say the least. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

Despite the growth in its earnings, the share price decline in the past three years is certainly concerning. The fact that the stock price hasn't grown along with earnings may indicate that other issues may be affecting that stock. Shareholders would be keen to know what's holding the stock back when earnings have grown. At the upcoming AGM, shareholders will get the opportunity to discuss any issues with the board, including those related to CEO remuneration and assess if the board's plan will likely improve performance in the future.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. That's why we did our research, and identified 4 warning signs for Vodatel Networks Holdings (of which 1 is a bit unpleasant!) that you should know about in order to have a holistic understanding of the stock.

Switching gears from Vodatel Networks Holdings, 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.

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This article by Simply Wall St is general in nature. 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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