Key Insights

• Gemilang International's Annual General Meeting to take place on 22nd of March
• CEO Chong Yong Pang's total compensation includes salary of US$257.0k
• Total compensation is 52% above industry average
• Gemilang International's three-year loss to shareholders was 73% while its EPS was down 103% over the past three years

Shareholders will probably not be too impressed with the underwhelming results at Gemilang International Limited (HKG:6163) recently. Shareholders can take the chance to hold the board and management accountable for the unsatisfactory performance at the next AGM on 22nd of March. 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 Chong Yong Pang Compare With Other Companies In The Industry?

At the time of writing, our data shows that Gemilang International Limited has a market capitalization of HK$55m, and reported total annual CEO compensation of US$472k for the year to October 2023. That's a notable decrease of 31% on last year. We note that the salary of US$257.0k makes up a sizeable portion of the total compensation received by the CEO.

For comparison, other companies in the Hong Kong Machinery industry with market capitalizations below HK$1.6b, reported a median total CEO compensation of US$310k. Accordingly, our analysis reveals that Gemilang International Limited pays Chong Yong Pang north of the industry median. What's more, Chong Yong Pang holds HK$19m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

On an industry level, roughly 70% of total compensation represents salary and 30% is other remuneration. Gemilang International sets aside a smaller share of compensation for salary, in comparison to the overall industry. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

Gemilang International Limited's Growth

Over the last three years, Gemilang International Limited has shrunk its earnings per share by 103% per year. It saw its revenue drop 48% over the last year.

The decline in EPS is a bit concerning. And the impression is worse when you consider revenue is down year-on-year. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. 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 Gemilang International Limited Been A Good Investment?

The return of -73% over three years would not have pleased Gemilang International Limited shareholders. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

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.

CEO compensation can have a massive impact on performance, but it's just one element. That's why we did some digging and identified 3 warning signs for Gemilang International that investors should think about before committing capital to this stock.

Important note: Gemilang International 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.