Key Insights

• Hong Kong ChaoShang Group's Annual General Meeting to take place on 20th of September
• CEO Ken Chan's total compensation includes salary of HK$2.34m
• The overall pay is comparable to the industry average
• Hong Kong ChaoShang Group's EPS declined by 36% over the past three years while total shareholder return over the past three years was 8.7%

Despite positive share price growth of 8.7% for Hong Kong ChaoShang Group Limited (HKG:2322) over the last few years, earnings growth has been disappointing, which suggests something is amiss. The upcoming AGM on 20th of September may be an opportunity for shareholders to bring up any concerns they may have for the board's attention. It would also be an opportunity for them to influence management through exercising their voting power on company resolutions, including CEO and executive remuneration, which could impact on firm performance in the future. From what we gathered, we think shareholders should be wary of raising CEO compensation until the company shows some marked improvement.

Comparing Hong Kong ChaoShang Group Limited's CEO Compensation With The Industry

Our data indicates that Hong Kong ChaoShang Group Limited has a market capitalization of HK$4.1b, and total annual CEO compensation was reported as HK$2.4m for the year to March 2024. Notably, that's a decrease of 28% over the year before. Notably, the salary which is HK$2.34m, represents most of the total compensation being paid.

In comparison with other companies in the Hong Kong Trade Distributors industry with market capitalizations ranging from HK$1.6b to HK$6.2b, the reported median CEO total compensation was HK$2.6m. This suggests that Hong Kong ChaoShang Group remunerates its CEO largely in line with the industry average.

On an industry level, roughly 94% of total compensation represents salary and 6% is other remuneration. Hong Kong ChaoShang Group pays a high salary, concentrating more on this aspect of compensation in comparison to non-salary pay. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

A Look at Hong Kong ChaoShang Group Limited's Growth Numbers

Over the last three years, Hong Kong ChaoShang Group Limited has shrunk its earnings per share by 36% per year. Its revenue is down 27% over the previous year.

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. 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 Hong Kong ChaoShang Group Limited Been A Good Investment?

Hong Kong ChaoShang Group Limited has generated a total shareholder return of 8.7% over three years, so most shareholders wouldn't be too disappointed. Although, there's always room to improve. Accordingly, a proposal to increase CEO remuneration without seeing an improvement in shareholder returns might not be met favorably by most shareholders.

In Summary...

Ken receives almost all of their compensation through a salary. Despite the positive returns on shareholders' investments, the fact that earnings have failed to grow makes us skeptical about whether these returns will continue. The upcoming AGM will provide shareholders the opportunity to revisit the company's remuneration policies and evaluate if the board's judgement and decision-making is aligned with that of the company's shareholders.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. In our study, we found 2 warning signs for Hong Kong ChaoShang Group you should be aware of, and 1 of them makes us a bit uncomfortable.

Important note: Hong Kong ChaoShang Group is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE 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.