Key Insights

• Shuoao International Holdings' Annual General Meeting to take place on 17th of June
• CEO Luming Feng's total compensation includes salary of HK$538.0k
• Total compensation is 77% below industry average
• Over the past three years, Shuoao International Holdings' EPS fell by 6.3% and over the past three years, the total loss to shareholders 44%

Performance at Shuoao International Holdings Limited (HKG:2336) has not been particularly rosy recently and shareholders will likely be holding CEO Luming Feng and the board accountable for this. The next AGM coming up on 17th of June will be a chance for shareholders to have their concerns addressed by the board, challenge management on company strategy and vote on resolutions such as executive remuneration, which may help change the company's future prospects. We think most shareholders will probably pass the CEO compensation, based on what we gathered.

How Does Total Compensation For Luming Feng Compare With Other Companies In The Industry?

At the time of writing, our data shows that Shuoao International Holdings Limited has a market capitalization of HK$232m, and reported total annual CEO compensation of HK$556k for the year to December 2023. This was the same amount the CEO received in the prior year. In particular, the salary of HK$538.0k, makes up a huge portion of the total compensation being paid to the CEO.

In comparison with other companies in the Hong Kong Electronic industry with market capitalizations under HK$1.6b, the reported median total CEO compensation was HK$2.4m. That is to say, Luming Feng is paid under the industry median.

On an industry level, roughly 79% of total compensation represents salary and 21% is other remuneration. Shuoao International Holdings has gone down a largely traditional route, paying Luming Feng a high salary, giving it preference over non-salary benefits. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

Shuoao International Holdings Limited's Growth

Over the last three years, Shuoao International Holdings Limited has shrunk its earnings per share by 6.3% per year. Its revenue is up 12% over the last year.

Few shareholders would be pleased to read that EPS have declined. While the revenue growth is good to see, it is outweighed by the fact that EPS are down, over three years. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. While we don't have analyst forecasts for the company, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.

Has Shuoao International Holdings Limited Been A Good Investment?

The return of -44% over three years would not have pleased Shuoao International Holdings Limited shareholders. So shareholders would probably want the company to be less generous with CEO compensation.

To Conclude...

Shuoao International Holdings pays its CEO a majority of compensation through a salary. 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, they can question the management's plans and strategies to turn performance around and reassess their investment thesis in regards to the company.

CEO pay is simply one of the many factors that need to be considered while examining business performance. We identified 2 warning signs for Shuoao International Holdings (1 shouldn't be ignored!) that you should be aware of before investing here.

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.