Key Insights

• Top Education Group's Annual General Meeting to take place on 29th of November
• CEO Cathy Xu's total compensation includes salary of AU$301.0k
• Total compensation is 30% above industry average
• Top Education Group's three-year loss to shareholders was 66% while its EPS grew by 118% over the past three years

In the past three years, the share price of Top Education Group Ltd (HKG:1752) 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. These are some of the concerns that shareholders may want to bring up at the next AGM held on 29th of November. Voting on resolutions such as executive remuneration and other matters could also be a way to influence management. Here's our take on why we think shareholders may want to be cautious of approving a raise for the CEO at the moment.

Comparing Top Education Group Ltd's CEO Compensation With The Industry

Our data indicates that Top Education Group Ltd has a market capitalization of HK$173m, and total annual CEO compensation was reported as AU$531k for the year to June 2024. That's a slight decrease of 4.2% on the prior year. In particular, the salary of AU$301.0k, makes up a fairly large portion of the total compensation being paid to the CEO.

For comparison, other companies in the Hong Kong Consumer Services industry with market capitalizations below HK$1.6b, reported a median total CEO compensation of AU$407k. Hence, we can conclude that Cathy Xu is remunerated higher than the industry median.

Talking in terms of the industry, salary represented approximately 81% of total compensation out of all the companies we analyzed, while other remuneration made up 19% of the pie. Top Education Group pays a modest slice of remuneration through salary, as compared to the broader industry. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.

Top Education Group Ltd's Growth

Over the past three years, Top Education Group Ltd has seen its earnings per share (EPS) grow by 118% per year. It achieved revenue growth of 8.2% over the last year.

This demonstrates that the company has been improving recently and is good news for the shareholders. It's also good to see modest revenue growth, suggesting the underlying business is healthy. 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 Top Education Group Ltd Been A Good Investment?

The return of -66% over three years would not have pleased Top Education Group Ltd 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. The fact that the stock price hasn't grown along with earnings may indicate that other issues may be affecting that stock. Shareholders would probably be keen to find out what are the other factors could be weighing down the stock. 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.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. That's why we did our research, and identified 4 warning signs for Top Education Group (of which 1 is concerning!) that you should know about in order to have a holistic understanding of the stock.

Important note: Top Education 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.