We Think Some Shareholders May Hesitate To Increase Kwoon Chung Bus Holdings Limited's (HKG:306) CEO Compensation

Key Insights

• Kwoon Chung Bus Holdings' Annual General Meeting to take place on 22nd of August
• Total pay for CEO James Wong includes HK$2.60m salary
• The total compensation is similar to the average for the industry
• Kwoon Chung Bus Holdings' three-year loss to shareholders was 27% while its EPS grew by 15% over the past three years

In the past three years, the share price of Kwoon Chung Bus Holdings Limited (HKG:306) 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. Shareholders may want to question the board on the future direction of the company at the upcoming AGM on 22nd of August. Voting on resolutions such as executive remuneration and other matters could also be a way to influence management. 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 Kwoon Chung Bus Holdings

Comparing Kwoon Chung Bus Holdings Limited's CEO Compensation With The Industry

Our data indicates that Kwoon Chung Bus Holdings Limited has a market capitalization of HK$720m, and total annual CEO compensation was reported as HK$2.8m for the year to March 2024. We note that's an increase of 42% above last year. Notably, the salary which is HK$2.60m, represents most of the total compensation being paid.

On comparing similar-sized companies in the Hong Kong Transportation industry with market capitalizations below HK$1.6b, we found that the median total CEO compensation was HK$3.9m. So it looks like Kwoon Chung Bus Holdings compensates James Wong in line with the median for the industry. Moreover, James Wong also holds HK$5.4m worth of Kwoon Chung Bus Holdings stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component	2024	2023	Proportion (2024)
Salary	HK$2.6m	HK$1.9m	93%
Other	HK$207k	HK$35k	7%
Total Compensation	HK$2.8m	HK$2.0m	100%

Talking in terms of the industry, salary represented approximately 72% of total compensation out of all the companies we analyzed, while other remuneration made up 28% of the pie. Kwoon Chung Bus Holdings pays out 93% of remuneration in the form of a salary, significantly higher than the industry average. 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 Kwoon Chung Bus Holdings Limited's Growth Numbers

Kwoon Chung Bus Holdings Limited's earnings per share (EPS) grew 15% per year over the last three years. It achieved revenue growth of 60% over the last year.

Shareholders would be glad to know that the company has improved itself over the last few years. Most shareholders would be pleased to see strong revenue growth combined with EPS growth. This combo suggests a fast growing 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 Kwoon Chung Bus Holdings Limited Been A Good Investment?

Since shareholders would have lost about 27% over three years, some Kwoon Chung Bus Holdings Limited investors would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

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. If there are some unknown variables that are influencing the stock's price, surely shareholders would have some concerns. 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 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 3 warning signs for Kwoon Chung Bus Holdings you should be aware of, and 2 of them are concerning.

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.