Key Insights

• Impro Precision Industries will host its Annual General Meeting on 20th of May
• Salary of HK$2.97m is part of CEO Ruibo Lu's total remuneration
• The total compensation is similar to the average for the industry
• Impro Precision Industries' EPS grew by 48% over the past three years while total shareholder return over the past three years was 33%

Under the guidance of CEO Ruibo Lu, Impro Precision Industries Limited (HKG:1286) has performed reasonably well recently. As shareholders go into the upcoming AGM on 20th of May, CEO compensation will probably not be their focus, but rather the steps management will take to continue the growth momentum. We present our case of why we think CEO compensation looks fair.

Comparing Impro Precision Industries Limited's CEO Compensation With The Industry

At the time of writing, our data shows that Impro Precision Industries Limited has a market capitalization of HK$4.1b, and reported total annual CEO compensation of HK$3.9m for the year to December 2023. That's a notable decrease of 18% on last year. We note that the salary portion, which stands at HK$2.97m constitutes the majority of total compensation received by the CEO.

On comparing similar companies from the Hong Kong Machinery industry with market caps ranging from HK$1.6b to HK$6.2b, we found that the median CEO total compensation was HK$3.9m. So it looks like Impro Precision Industries compensates Ruibo Lu in line with the median for the industry. Moreover, Ruibo Lu also holds HK$3.0b worth of Impro Precision Industries stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Speaking on an industry level, nearly 76% of total compensation represents salary, while the remainder of 24% is other remuneration. Our data reveals that Impro Precision Industries allocates salary more or less in line with the wider market. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

A Look at Impro Precision Industries Limited's Growth Numbers

Over the past three years, Impro Precision Industries Limited has seen its earnings per share (EPS) grow by 48% per year. It achieved revenue growth of 5.7% over the last year.

Shareholders would be glad to know that the company has improved itself over the last few years. It's good to see a bit of revenue growth, as this suggests the business is able to grow sustainably. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.

Has Impro Precision Industries Limited Been A Good Investment?

With a total shareholder return of 33% over three years, Impro Precision Industries Limited shareholders would, in general, be reasonably content. But they probably wouldn't be so happy as to think the CEO should be paid more than is normal, for companies around this size.

In Summary...

Given that the company's overall performance has been reasonable, the CEO remuneration policy might not be shareholders' central point of focus in the upcoming AGM. Despite the pleasing results, we still think that any proposed increases to CEO compensation will be examined based on a case by case basis and linked to performance outcomes.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. That's why we did some digging and identified 1 warning sign for Impro Precision Industries that investors should think about before committing capital to this 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.