Key Insights

• Cheuk Nang (Holdings) will host its Annual General Meeting on 22nd of November
• CEO Cecil Chao's total compensation includes salary of HK$9.31m
• The total compensation is 373% higher than the average for the industry
• Cheuk Nang (Holdings)'s three-year loss to shareholders was 38% while its EPS was down 25% over the past three years

Shareholders will probably not be too impressed with the underwhelming results at Cheuk Nang (Holdings) Limited (HKG:131) recently. At the upcoming AGM on 22nd of November, shareholders can hear from the board including their plans for turning around performance. 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.

View our latest analysis for Cheuk Nang (Holdings)

Comparing Cheuk Nang (Holdings) Limited's CEO Compensation With The Industry

According to our data, Cheuk Nang (Holdings) Limited has a market capitalization of HK$1.1b, and paid its CEO total annual compensation worth HK$9.3m over the year to June 2023. This means that the compensation hasn't changed much from last year. Notably, the salary of HK$9.3m is the entirety of the CEO compensation.

On comparing similar-sized companies in the Hong Kong Real Estate industry with market capitalizations below HK$1.6b, we found that the median total CEO compensation was HK$2.0m. This suggests that Cecil Chao is paid more than the median for the industry. Furthermore, Cecil Chao directly owns HK$850m worth of shares in the company, implying that they are deeply invested in the company's success.

Speaking on an industry level, nearly 77% of total compensation represents salary, while the remainder of 23% is other remuneration. At the company level, Cheuk Nang (Holdings) pays Cecil Chao solely through a salary, preferring to go down a conventional route. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

Cheuk Nang (Holdings) Limited's Growth

Over the last three years, Cheuk Nang (Holdings) Limited has shrunk its earnings per share by 25% per year. It saw its revenue drop 20% over the last year.

The decline in EPS is a bit concerning. And the impression is worse when you consider revenue is down year-on-year. 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 Cheuk Nang (Holdings) Limited Been A Good Investment?

Few Cheuk Nang (Holdings) Limited shareholders would feel satisfied with the return of -38% over three years. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

Cheuk Nang (Holdings) rewards its CEO solely through a salary, ignoring non-salary benefits completely. Along with the business performing poorly, shareholders have suffered with poor share price returns on their investments, suggesting that there's little to no chance of them being in favor of a CEO pay raise. At the upcoming AGM, the board will get the chance to explain the steps it plans to take to improve business performance.

CEO pay is simply one of the many factors that need to be considered while examining business performance. We did our research and identified 2 warning signs (and 1 which is a bit unpleasant) in Cheuk Nang (Holdings) we think you should know about.

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.