Key Insights

• South China Holdings will host its Annual General Meeting on 27th of June
• Total pay for CEO Christina Cheung includes HK$3.78m salary
• The overall pay is 123% above the industry average
• Over the past three years, South China Holdings' EPS fell by 56% and over the past three years, the total loss to shareholders 57%

The results at South China Holdings Company Limited (HKG:413) have been quite disappointing recently and CEO Christina Cheung bears some responsibility for this. Shareholders can take the chance to hold the board and management accountable for the unsatisfactory performance at the next AGM on 27th of June. It would also be an opportunity for shareholders to influence management through voting on company resolutions such as executive remuneration, which could impact the firm significantly. The data we present below explains why we think CEO compensation is not consistent with recent performance.

Comparing South China Holdings Company Limited's CEO Compensation With The Industry

At the time of writing, our data shows that South China Holdings Company Limited has a market capitalization of HK$571m, and reported total annual CEO compensation of HK$4.0m for the year to December 2023. This was the same amount the CEO received in the prior year. We note that the salary portion, which stands at HK$3.78m constitutes the majority of total compensation received by the CEO.

For comparison, other companies in the Hong Kong Leisure industry with market capitalizations below HK$1.6b, reported a median total CEO compensation of HK$1.8m. Accordingly, our analysis reveals that South China Holdings Company Limited pays Christina Cheung north of the industry median. Furthermore, Christina Cheung directly owns HK$1.8m worth of shares in the company, implying that they are deeply invested in the company's success.

On an industry level, roughly 92% of total compensation represents salary and 8% is other remuneration. Although there is a difference in how total compensation is set, South China Holdings more or less reflects the market in terms of setting the salary. 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.

South China Holdings Company Limited's Growth

Over the last three years, South China Holdings Company Limited has shrunk its earnings per share by 56% per year. In the last year, its revenue is down 24%.

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. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has South China Holdings Company Limited Been A Good Investment?

Few South China Holdings Company Limited shareholders would feel satisfied with the return of -57% over three years. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

In Summary...

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.

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 South China Holdings you should be aware of, and 2 of them can't be ignored.

Switching gears from South China Holdings, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.

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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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com