Key Insights

• E. Bon Holdings' Annual General Meeting to take place on 6th of September
• Salary of HK$4.25m is part of CEO Tony Tse's total remuneration
• Total compensation is 98% above industry average
• Over the past three years, E. Bon Holdings' EPS fell by 13% and over the past three years, the total loss to shareholders 56%

Shareholders will probably not be too impressed with the underwhelming results at E. Bon Holdings Limited (HKG:599) recently. Shareholders will be interested in what the board will have to say about turning performance around at the next AGM on 6th of September. 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. The data we present below explains why we think CEO compensation is not consistent with recent performance.

How Does Total Compensation For Tony Tse Compare With Other Companies In The Industry?

Our data indicates that E. Bon Holdings Limited has a market capitalization of HK$112m, and total annual CEO compensation was reported as HK$4.4m for the year to March 2024. That's a notable increase of 18% on last year. Notably, the salary which is HK$4.25m, represents most of the total compensation being paid.

In comparison with other companies in the Hong Kong Trade Distributors industry with market capitalizations under HK$1.6b, the reported median total CEO compensation was HK$2.2m. This suggests that Tony Tse is paid more than the median for the industry.

On an industry level, around 94% of total compensation represents salary and 6% is other remuneration. E. Bon Holdings has gone down a largely traditional route, paying Tony Tse a high salary, giving it preference over non-salary benefits. 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.

E. Bon Holdings Limited's Growth

E. Bon Holdings Limited has reduced its earnings per share by 13% a year over the last three years. Its revenue is up 1.1% over the last year.

Few shareholders would be pleased to read that EPS have declined. The modest increase in revenue in the last year isn't enough to make us overlook the disappointing change in EPS. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. 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 E. Bon Holdings Limited Been A Good Investment?

Few E. Bon Holdings Limited shareholders would feel satisfied with the return of -56% over three years. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

Tony receives almost all of their compensation through a salary. Given that shareholders haven't seen any positive returns on their investment, not to mention the lack of earnings growth, this may suggest that few of them would be willing to award the CEO with a pay rise. 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.

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 3 warning signs (and 1 which is concerning) in E. Bon Holdings we think you should know about.

Important note: E. Bon Holdings 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.