Key Insights

• IMS Group Holdings to hold its Annual General Meeting on 23rd of August
• Total pay for CEO Andrew Tam includes HK$2.68m salary
• Total compensation is similar to the industry average
• IMS Group Holdings' EPS grew by 42% over the past three years while total shareholder loss over the past three years was 63%

In the past three years, the share price of IMS Group Holdings Limited (HKG:8136) has struggled to grow and now shareholders are sitting on a loss. However, what is unusual is that EPS growth has been positive, suggesting that the share price has diverged from fundamentals. The AGM coming up on the 23rd of August could be an opportunity for shareholders to bring these concerns to the board's attention. Voting on resolutions such as executive remuneration and other matters could also be a way to influence management. 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 Andrew Tam Compare With Other Companies In The Industry?

Our data indicates that IMS Group Holdings Limited has a market capitalization of HK$41m, and total annual CEO compensation was reported as HK$3.1m for the year to March 2024. That is, the compensation was roughly the same as last year. In particular, the salary of HK$2.68m, makes up a huge portion of the total compensation being paid to the CEO.

For comparison, other companies in the Hong Kong Electrical industry with market capitalizations below HK$1.6b, reported a median total CEO compensation of HK$3.1m. So it looks like IMS Group Holdings compensates Andrew Tam in line with the median for the industry. Moreover, Andrew Tam also holds HK$21m worth of IMS Group Holdings stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

On an industry level, roughly 74% of total compensation represents salary and 26% is other remuneration. IMS Group Holdings is paying a higher share of its remuneration through a salary in comparison to the overall industry. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

IMS Group Holdings Limited's Growth

IMS Group Holdings Limited's earnings per share (EPS) grew 42% per year over the last three years. It achieved revenue growth of 17% over the last year.

This demonstrates that the company has been improving recently and is good news for the shareholders. This sort of respectable year-on-year revenue growth is often seen at a healthy, growing business. 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 IMS Group Holdings Limited Been A Good Investment?

The return of -63% over three years would not have pleased IMS Group Holdings Limited shareholders. So shareholders would probably want the company to be less generous with CEO compensation.

To Conclude...

The fact that shareholders are sitting on a loss on the value of their shares in the past few years is certainly disconcerting. A huge lag in share price growth when earnings have grown may indicate there could be other issues that are affecting the company at the moment that the market is focused on. If there are some unknown variables that are influencing the stock's price, surely shareholders would have some concerns. The upcoming AGM will be a chance for shareholders to question the board on key matters, such as CEO remuneration or any other issues they might have and revisit their investment thesis with regards to the company.

CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. That's why we did some digging and identified 1 warning sign for IMS Group Holdings that investors should think about before committing capital to this stock.

Switching gears from IMS Group 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.