Key Insights

• Solartech International Holdings will host its Annual General Meeting on 8th of December
• Total pay for CEO Lai Him Chau includes HK$7.15m salary
• The overall pay is 618% above the industry average
• Solartech International Holdings' three-year loss to shareholders was 52% while its EPS was down 32% over the past three years

The results at Solartech International Holdings Limited (HKG:1166) have been quite disappointing recently and CEO Lai Him Chau bears some responsibility for this. Shareholders will be interested in what the board will have to say about turning performance around at the next AGM on 8th of December. This will be also be a chance where they can challenge the board on company direction and vote on resolutions such as executive remuneration. We present the case why we think CEO compensation is out of sync with company performance.

See our latest analysis for Solartech International Holdings

Comparing Solartech International Holdings Limited's CEO Compensation With The Industry

Our data indicates that Solartech International Holdings Limited has a market capitalization of HK$76m, and total annual CEO compensation was reported as HK$7.2m for the year to June 2023. That's mostly flat as compared to the prior year's compensation. It is worth noting that the CEO compensation consists entirely of the salary, worth HK$7.2m.

On comparing similar-sized companies in the Hong Kong Electrical industry with market capitalizations below HK$1.6b, we found that the median total CEO compensation was HK$995k. This suggests that Lai Him Chau is paid more than the median for the industry.

On an industry level, roughly 87% of total compensation represents salary and 13% is other remuneration. On a company level, Solartech International Holdings prefers to reward its CEO through a salary, opting not to pay Lai Him Chau through non-salary benefits. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

Solartech International Holdings Limited's Growth

Over the last three years, Solartech International Holdings Limited has shrunk its earnings per share by 32% per year. It saw its revenue drop 21% over the last year.

The decline in EPS is a bit concerning. This is compounded by the fact revenue is actually down on last year. These factors suggest that the business performance wouldn't really justify a high pay packet 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 Solartech International Holdings Limited Been A Good Investment?

The return of -52% over three years would not have pleased Solartech International Holdings Limited shareholders. So shareholders would probably want the company to be less generous with CEO compensation.

To Conclude...

Solartech International Holdings rewards its CEO solely through a salary, ignoring non-salary benefits completely. Along with the business performing poorly, shareholders have suffered with poor share price returns on their investments, suggesting that there's little to no chance of them being in favor of a CEO pay raise. At the upcoming AGM, the board will get the chance to explain the steps it plans to take to improve business performance.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. We did our research and identified 2 warning signs (and 1 which shouldn't be ignored) in Solartech International Holdings we think you should know about.

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.