Key Insights

• South China Financial Holdings will host its Annual General Meeting on 27th of June
• Salary of HK$2.40m is part of CEO Jessica Ng's total remuneration
• Total compensation is similar to the industry average
• South China Financial Holdings' EPS grew by 9.6% over the past three years while total shareholder loss over the past three years was 41%

Shareholders of South China Financial Holdings Limited (HKG:619) will have been dismayed by the negative share price return over the last three years. Despite positive EPS growth in the past few years, the share price hasn't tracked the fundamental performance of the company. The AGM coming up on the 27th of June could be an opportunity for shareholders to bring these concerns to the board's attention. They could also try to influence management and firm direction through voting on resolutions such as executive remuneration and other company matters. We discuss below why we think shareholders should be cautious of approving a raise for the CEO at the moment.

How Does Total Compensation For Jessica Ng Compare With Other Companies In The Industry?

At the time of writing, our data shows that South China Financial Holdings Limited has a market capitalization of HK$90m, and reported total annual CEO compensation of HK$2.4m for the year to December 2023. We note that's a decrease of 19% compared to last year. In particular, the salary of HK$2.40m, makes up a huge portion of the total compensation being paid to the CEO.

In comparison with other companies in the Hong Kong Capital Markets industry with market capitalizations under HK$1.6b, the reported median total CEO compensation was HK$2.1m. From this we gather that Jessica Ng is paid around the median for CEOs in the industry.

On an industry level, around 83% of total compensation represents salary and 17% is other remuneration. South China Financial Holdings has gone down a largely traditional route, paying Jessica Ng a high salary, giving it preference over non-salary benefits. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

A Look at South China Financial Holdings Limited's Growth Numbers

South China Financial Holdings Limited has seen its earnings per share (EPS) increase by 9.6% a year over the past three years. It achieved revenue growth of 31% over the last year.

It's great to see that revenue growth is strong. Combined with modest EPS growth, we get a good impression of the company. We'd stop short of saying the business performance is amazing, but there are enough positives to justify further research, or even adding the stock to your watch-list. 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 South China Financial Holdings Limited Been A Good Investment?

The return of -41% over three years would not have pleased South China Financial Holdings Limited shareholders. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

South China Financial Holdings pays its CEO a majority of compensation through a salary. The fact that shareholders are sitting on a loss on the value of their shares in the past few years is certainly disconcerting. The stock's movement is disjointed with the company's earnings growth, which ideally should move in the same direction. 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. We did our research and identified 2 warning signs (and 1 which can't be ignored) in South China Financial 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.

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