Should Shareholders Worry About Directel Holdings Limited's (HKG:8337) CEO Compensation Package?

Performance at Directel Holdings Limited (HKG:8337) has not been particularly rosy recently and shareholders will likely be holding CEO Kwok Chau Pang and the board accountable for this. At the upcoming AGM on 13 May 2021, shareholders may have the opportunity to influence management to turn the performance around by voting on resolutions such as executive remuneration and other matters. From our analysis below, we think CEO compensation looks appropriate for now.

Check out our latest analysis for Directel Holdings

How Does Total Compensation For Kwok Chau Pang Compare With Other Companies In The Industry?

According to our data, Directel Holdings Limited has a market capitalization of HK$46m, and paid its CEO total annual compensation worth HK$638k over the year to December 2020. This means that the compensation hasn't changed much from last year. In particular, the salary of HK$492.0k, makes up a huge portion of the total compensation being paid to 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$1.1m. That is to say, Kwok Chau Pang is paid under the industry median. What's more, Kwok Chau Pang holds HK$360k 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$492k	HK$492k	77%
Other	HK$146k	HK$162k	23%
Total Compensation	HK$638k	HK$654k	100%

On an industry level, around 57% of total compensation represents salary and 43% is other remuneration. According to our research, Directel Holdings has allocated a higher percentage of pay to salary in comparison to the wider 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 Directel Holdings Limited's Growth Numbers

Over the last three years, Directel Holdings Limited has shrunk its earnings per share by 76% per year. In the last year, its revenue is down 13%.

The decline in EPS is a bit concerning. And the fact that revenue is down year on year arguably paints an ugly picture. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Directel Holdings Limited Been A Good Investment?

With a total shareholder return of -86% over three years, Directel 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, 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. In our study, we found 4 warning signs for Directel Holdings you should be aware of, and 3 of them are potentially serious.

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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