We Think Shareholders Are Less Likely To Approve A Large Pay Rise For Datronix Holdings Limited's (HKG:889) CEO For Now

Key Insights

• Datronix Holdings' Annual General Meeting to take place on 5th of June
• Salary of HK$7.69m is part of CEO Paul Y. Siu's total remuneration
• The overall pay is 224% above the industry average
• Over the past three years, Datronix Holdings' EPS grew by 51% and over the past three years, the total loss to shareholders 44%

In the past three years, the share price of Datronix Holdings Limited (HKG:889) has struggled to grow and now shareholders are sitting on a loss. What is concerning is that despite positive EPS growth, the share price has not tracked the trend in fundamentals. The AGM coming up on the 5th of June could be an opportunity for shareholders to bring these concerns to the board's attention. They could also influence management through voting on resolutions such as executive remuneration. Here's our take on why we think shareholders may want to be cautious of approving a raise for the CEO at the moment.

Check out our latest analysis for Datronix Holdings

How Does Total Compensation For Paul Y. Siu Compare With Other Companies In The Industry?

At the time of writing, our data shows that Datronix Holdings Limited has a market capitalization of HK$109m, and reported total annual CEO compensation of HK$7.7m for the year to December 2023. There was no change in the compensation compared to last year. It is worth noting that the CEO compensation consists entirely of the salary, worth HK$7.7m.

In comparison with other companies in the Hong Kong Electronic industry with market capitalizations under HK$1.6b, the reported median total CEO compensation was HK$2.4m. Hence, we can conclude that Paul Y. Siu is remunerated higher than the industry median. What's more, Paul Y. Siu holds HK$79m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component	2023	2022	Proportion (2023)
Salary	HK$7.7m	HK$7.7m	100%
Other	-	-	-
Total Compensation	HK$7.7m	HK$7.7m	100%

Talking in terms of the industry, salary represented approximately 79% of total compensation out of all the companies we analyzed, while other remuneration made up 21% of the pie. On a company level, Datronix Holdings prefers to reward its CEO through a salary, opting not to pay Paul Y. Siu through non-salary benefits. 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 Datronix Holdings Limited's Growth Numbers

Datronix Holdings Limited's earnings per share (EPS) grew 51% per year over the last three years. Its revenue is down 15% over the previous year.

Shareholders would be glad to know that the company has improved itself over the last few years. The lack of revenue growth isn't ideal, but it is the bottom line that counts most in business. 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 Datronix Holdings Limited Been A Good Investment?

Few Datronix Holdings Limited shareholders would feel satisfied with the return of -44% over three years. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

To Conclude...

Datronix Holdings rewards its CEO solely through a salary, ignoring non-salary benefits completely. 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 probably be keen to find out what are the other factors could be weighing down the stock. These concerns should be addressed at the upcoming AGM, where shareholders can question the board and evaluate if their judgement and decision making is still in line with their expectations.

CEO pay is simply one of the many factors that need to be considered while examining business performance. That's why we did our research, and identified 2 warning signs for Datronix Holdings (of which 1 doesn't sit too well with us!) 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.