Key Insights

• Cosmos Machinery Enterprises' Annual General Meeting to take place on 29th of May
• Salary of HK$2.08m is part of CEO Freeman Tang's total remuneration
• The total compensation is similar to the average for the industry
• Cosmos Machinery Enterprises' three-year loss to shareholders was 58% while its EPS was down 57% over the past three years

Shareholders will probably not be too impressed with the underwhelming results at Cosmos Machinery Enterprises Limited (HKG:118) recently. Shareholders can take the chance to hold the board and management accountable for the unsatisfactory performance at the next AGM on 29th of May. 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.

How Does Total Compensation For Freeman Tang Compare With Other Companies In The Industry?

At the time of writing, our data shows that Cosmos Machinery Enterprises Limited has a market capitalization of HK$190m, and reported total annual CEO compensation of HK$2.7m for the year to December 2023. That's mostly flat as compared to the prior year's compensation. In particular, the salary of HK$2.08m, makes up a huge portion of the total compensation being paid to the CEO.

In comparison with other companies in the Hong Kong Machinery industry with market capitalizations under HK$1.6b, the reported median total CEO compensation was HK$2.1m. This suggests that Cosmos Machinery Enterprises remunerates its CEO largely in line with the industry average.

Speaking on an industry level, nearly 77% of total compensation represents salary, while the remainder of 23% is other remuneration. There isn't a significant difference between Cosmos Machinery Enterprises 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.

Cosmos Machinery Enterprises Limited's Growth

Cosmos Machinery Enterprises Limited has reduced its earnings per share by 57% a year over the last three years. In the last year, its revenue is down 7.0%.

Overall this is not a very positive result for shareholders. 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. 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 Cosmos Machinery Enterprises Limited Been A Good Investment?

Few Cosmos Machinery Enterprises Limited shareholders would feel satisfied with the return of -58% over three years. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

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, 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 is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. That's why we did our research, and identified 2 warning signs for Cosmos Machinery Enterprises (of which 1 doesn't sit too well with us!) that you should know about in order to have a holistic understanding of the stock.

Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.

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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.