Key Insights

• Ngai Hing Hong's Annual General Meeting to take place on 14th of November
• CEO Kwok Kwong Hui's total compensation includes salary of HK$2.34m
• Total compensation is 238% above industry average
• Over the past three years, Ngai Hing Hong's EPS fell by 105% and over the past three years, the total loss to shareholders 45%

The results at Ngai Hing Hong Company Limited (HKG:1047) have been quite disappointing recently and CEO Kwok Kwong Hui bears some responsibility for this. Shareholders can take the chance to hold the board and management accountable for the unsatisfactory performance at the next AGM on 14th of November. 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. From our analysis, we think CEO compensation may need a review in light of the recent performance.

How Does Total Compensation For Kwok Kwong Hui Compare With Other Companies In The Industry?

Our data indicates that Ngai Hing Hong Company Limited has a market capitalization of HK$122m, and total annual CEO compensation was reported as HK$4.4m for the year to June 2024. That is, the compensation was roughly the same as last year. Notably, the salary which is HK$2.34m, represents a considerable chunk of the total compensation being paid.

For comparison, other companies in the Hong Kong Chemicals industry with market capitalizations below HK$1.6b, reported a median total CEO compensation of HK$1.3m. Hence, we can conclude that Kwok Kwong Hui is remunerated higher than the industry median. What's more, Kwok Kwong Hui holds HK$6.6m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Talking in terms of the industry, salary represented approximately 74% of total compensation out of all the companies we analyzed, while other remuneration made up 26% of the pie. In Ngai Hing Hong's case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

Ngai Hing Hong Company Limited's Growth

Ngai Hing Hong Company Limited has reduced its earnings per share by 105% a year over the last three years. It achieved revenue growth of 8.4% over the last year.

Overall this is not a very positive result for shareholders. And the modest revenue growth over 12 months isn't much comfort against the reduced EPS. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Ngai Hing Hong Company Limited Been A Good Investment?

With a total shareholder return of -45% over three years, Ngai Hing Hong Company Limited shareholders would by and large be disappointed. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

To Conclude...

Not only have shareholders not seen a favorable return on their investment, but the business hasn't performed well either. Few shareholders would be willing to award the CEO with a 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.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. That's why we did our research, and identified 3 warning signs for Ngai Hing Hong (of which 2 are potentially serious!) that you should know about in order to have a holistic understanding of the stock.

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.