Key Insights

• CEC International Holdings to hold its Annual General Meeting on 26th of September
• CEO Fung Kwan Tang's total compensation includes salary of HK$5.28m
• The total compensation is 113% higher than the average for the industry
• CEC International Holdings' EPS declined by 39% over the past three years while total shareholder loss over the past three years was 77%

The results at CEC International Holdings Limited (HKG:759) have been quite disappointing recently and CEO Fung Kwan Tang bears some responsibility for this. At the upcoming AGM on 26th of September, shareholders can hear from the board including their plans for turning around performance. It would also be an opportunity for shareholders to influence management through voting on company resolutions such as executive remuneration, which could impact the firm significantly. We present the case why we think CEO compensation is out of sync with company performance.

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

At the time of writing, our data shows that CEC International Holdings Limited has a market capitalization of HK$101m, and reported total annual CEO compensation of HK$5.7m for the year to April 2024. We note that's a decrease of 21% compared to last year. We note that the salary portion, which stands at HK$5.28m constitutes the majority of total compensation received by the CEO.

On comparing similar-sized companies in the Hong Kong Consumer Retailing industry with market capitalizations below HK$1.6b, we found that the median total CEO compensation was HK$2.7m. This suggests that Fung Kwan Tang is paid more than the median for the industry. Moreover, Fung Kwan Tang also holds HK$633k worth of CEC International Holdings stock directly under their own name.

Talking in terms of the industry, salary represented approximately 67% of total compensation out of all the companies we analyzed, while other remuneration made up 33% of the pie. It's interesting to note that CEC International Holdings pays out a greater portion of remuneration through salary, compared to the industry. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

A Look at CEC International Holdings Limited's Growth Numbers

Over the last three years, CEC International Holdings Limited has shrunk its earnings per share by 39% per year. Its revenue is down 13% over the previous year.

Overall this is not a very positive result for shareholders. And the fact that revenue is down year on year arguably paints an ugly picture. 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 CEC International Holdings Limited Been A Good Investment?

With a total shareholder return of -77% over three years, CEC International Holdings Limited shareholders would by and large be disappointed. 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, the board will get the chance to explain the steps it plans to take to improve business performance.

CEO compensation can have a massive impact on performance, but it's just one element. We did our research and spotted 1 warning sign for CEC International Holdings that investors should look into moving forward.

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.