Key Insights

• HKC International Holdings to hold its Annual General Meeting on 23rd of August
• Salary of HK$1.04m is part of CEO Hubert Chan's total remuneration
• The total compensation is similar to the average for the industry
• HKC International Holdings' three-year loss to shareholders was 75% while its EPS was down 107% over the past three years

Shareholders will probably not be too impressed with the underwhelming results at HKC International Holdings Limited (HKG:248) recently. Shareholders will be interested in what the board will have to say about turning performance around at the next AGM on 23rd of August. 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. We present the case why we think CEO compensation is out of sync with company performance.

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

According to our data, HKC International Holdings Limited has a market capitalization of HK$35m, and paid its CEO total annual compensation worth HK$1.2m over the year to March 2024. That's just a smallish increase of 5.5% on last year. In particular, the salary of HK$1.04m, makes up a huge portion of the total compensation being paid to the CEO.

For comparison, other companies in the Hong Kong Specialty Retail industry with market capitalizations below HK$1.6b, reported a median total CEO compensation of HK$1.7m. This suggests that HKC International Holdings remunerates its CEO largely in line with the industry average. What's more, Hubert Chan holds HK$19m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

On an industry level, roughly 89% of total compensation represents salary and 11% is other remuneration. HKC International Holdings is largely mirroring the industry average when it comes to the share a salary enjoys in overall compensation. 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 HKC International Holdings Limited's Growth Numbers

Over the last three years, HKC International Holdings Limited has shrunk its earnings per share by 107% per year. In the last year, its revenue is up 4.0%.

The decline in EPS is a bit concerning. The fairly low revenue growth fails to impress given that the EPS is down. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. While we don't have analyst forecasts for the company, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.

Has HKC International Holdings Limited Been A Good Investment?

Few HKC International Holdings Limited shareholders would feel satisfied with the return of -75% over three years. Therefore, it might be upsetting for shareholders if the CEO were paid 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 can have a massive impact on performance, but it's just one element. That's why we did some digging and identified 3 warning signs for HKC International Holdings that you should be aware of before investing.

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.