We Think Shareholders May Want To Consider A Review Of VSTECS Holdings Limited's (HKG:856) CEO Compensation Package

Key Insights

• VSTECS Holdings to hold its Annual General Meeting on 30th of May
• Total pay for CEO David Li includes HK$5.46m salary
• The overall pay is 88% above the industry average
• Over the past three years, VSTECS Holdings' EPS fell by 5.3% and over the past three years, the total loss to shareholders 29%

Shareholders will probably not be too impressed with the underwhelming results at VSTECS Holdings Limited (HKG:856) recently. At the upcoming AGM on 30th of May, shareholders can hear from the board including their plans for turning around performance. This will be also be a chance where they can challenge the board on company direction and vote on resolutions such as executive remuneration. From our analysis, we think CEO compensation may need a review in light of the recent performance.

View our latest analysis for VSTECS Holdings

Comparing VSTECS Holdings Limited's CEO Compensation With The Industry

According to our data, VSTECS Holdings Limited has a market capitalization of HK$7.0b, and paid its CEO total annual compensation worth HK$10m over the year to December 2023. We note that's a decrease of 9.1% compared to last year. Notably, the salary which is HK$5.46m, represents a considerable chunk of the total compensation being paid.

On comparing similar companies from the Hong Kong Electronic industry with market caps ranging from HK$3.1b to HK$12b, we found that the median CEO total compensation was HK$5.3m. Accordingly, our analysis reveals that VSTECS Holdings Limited pays David Li north of the industry median. Moreover, David Li also holds HK$1.9b worth of VSTECS 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$5.5m	HK$5.5m	55%
Other	HK$4.6m	HK$5.6m	45%
Total Compensation	HK$10m	HK$11m	100%

Speaking on an industry level, nearly 79% of total compensation represents salary, while the remainder of 21% is other remuneration. It's interesting to note that VSTECS 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.

VSTECS Holdings Limited's Growth

VSTECS Holdings Limited has reduced its earnings per share by 5.3% a year over the last three years. Its revenue is down 4.4% over the previous year.

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. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.

Has VSTECS Holdings Limited Been A Good Investment?

Since shareholders would have lost about 29% over three years, some VSTECS Holdings Limited investors would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

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, they can question the management's plans and strategies to turn performance around and reassess their investment thesis in regards to the company.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. In our study, we found 2 warning signs for VSTECS Holdings you should be aware of, and 1 of them makes us a bit uncomfortable.

Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.

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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.