Key Insights

• ITE (Holdings)'s Annual General Meeting to take place on 5th of August
• CEO Vincent Lau's total compensation includes salary of HK$1.61m
• The overall pay is 39% above the industry average
• Over the past three years, ITE (Holdings)'s EPS fell by 38% and over the past three years, the total loss to shareholders 33%

ITE (Holdings) Limited (HKG:8092) has not performed well recently and CEO Vincent Lau will probably need to up their game. At the upcoming AGM on 5th of August, shareholders can hear from the board including their plans for turning around performance. 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.

How Does Total Compensation For Vincent Lau Compare With Other Companies In The Industry?

According to our data, ITE (Holdings) Limited has a market capitalization of HK$23m, and paid its CEO total annual compensation worth HK$1.7m over the year to March 2024. That is, the compensation was roughly the same as last year. Notably, the salary which is HK$1.61m, represents most of the total compensation being paid.

On comparing similar-sized companies in the Hong Kong IT industry with market capitalizations below HK$1.6b, we found that the median total CEO compensation was HK$1.2m. This suggests that Vincent Lau is paid more than the median for the industry.

On an industry level, roughly 88% of total compensation represents salary and 12% is other remuneration. Although there is a difference in how total compensation is set, ITE (Holdings) more or less reflects the market in terms of setting the salary. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

ITE (Holdings) Limited's Growth

Over the last three years, ITE (Holdings) Limited has shrunk its earnings per share by 38% per year. Its revenue is down 20% over the previous year.

Overall this is not a very positive result for shareholders. 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 ITE (Holdings) Limited Been A Good Investment?

The return of -33% over three years would not have pleased ITE (Holdings) Limited shareholders. So shareholders would probably want the company to be less generous with CEO compensation.

In Summary...

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.

CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. In our study, we found 6 warning signs for ITE (Holdings) you should be aware of, and 3 of them are a bit unpleasant.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com