Should Shareholders Reconsider Infinity Logistics and Transport Ventures Limited's (HKG:1442) CEO Compensation Package?

Key Insights

• Infinity Logistics and Transport Ventures to hold its Annual General Meeting on 7th of June
• CEO Kong Yew Chan's total compensation includes salary of RM2.62m
• The overall pay is 350% above the industry average
• Infinity Logistics and Transport Ventures' three-year loss to shareholders was 71% while its EPS was down 11% over the past three years

The results at Infinity Logistics and Transport Ventures Limited (HKG:1442) have been quite disappointing recently and CEO Kong Yew Chan bears some responsibility for this. Shareholders will be interested in what the board will have to say about turning performance around at the next AGM on 7th of June. They will also get a chance to influence managerial decision-making through voting on resolutions such as executive remuneration, which may impact firm value in the future. We present the case why we think CEO compensation is out of sync with company performance.

Check out our latest analysis for Infinity Logistics and Transport Ventures

How Does Total Compensation For Kong Yew Chan Compare With Other Companies In The Industry?

According to our data, Infinity Logistics and Transport Ventures Limited has a market capitalization of HK$712m, and paid its CEO total annual compensation worth RM3.5m over the year to December 2023. We note that's a decrease of 17% compared to last year. We note that the salary portion, which stands at RM2.62m constitutes the majority of total compensation received by the CEO.

For comparison, other companies in the Hong Kong Logistics industry with market capitalizations below HK$1.6b, reported a median total CEO compensation of RM768k. Hence, we can conclude that Kong Yew Chan is remunerated higher than the industry median. Moreover, Kong Yew Chan also holds HK$110m worth of Infinity Logistics and Transport Ventures 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	RM2.6m	RM2.1m	76%
Other	RM832k	RM2.0m	24%
Total Compensation	RM3.5m	RM4.2m	100%

Talking in terms of the industry, salary represented approximately 76% of total compensation out of all the companies we analyzed, while other remuneration made up 24% of the pie. There isn't a significant difference between Infinity Logistics and Transport Ventures and the broader market, in terms of salary allocation in the overall compensation package. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.

Infinity Logistics and Transport Ventures Limited's Growth

Over the last three years, Infinity Logistics and Transport Ventures Limited has shrunk its earnings per share by 11% per year. It achieved revenue growth of 4.0% over the last year.

Overall this is not a very positive result for shareholders. The fairly low revenue growth fails to impress given that the EPS is down. 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 Infinity Logistics and Transport Ventures Limited Been A Good Investment?

Few Infinity Logistics and Transport Ventures Limited shareholders would feel satisfied with the return of -71% over three years. 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, the board will get the chance to explain the steps it plans to take to improve business performance.

CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. We've identified 3 warning signs for Infinity Logistics and Transport Ventures that investors should be aware of in a dynamic business environment.

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.