Key Insights

• Vongroup's Annual General Meeting to take place on 31st of October
• Salary of HK$600.0k is part of CEO David Vong's total remuneration
• The total compensation is similar to the average for the industry
• Vongroup's EPS declined by 9.5% over the past three years while total shareholder loss over the past three years was 9.0%

The results at Vongroup Limited (HKG:318) have been quite disappointing recently and CEO David Vong bears some responsibility for this. Shareholders can take the chance to hold the board and management accountable for the unsatisfactory performance at the next AGM on 31st of October. This will be also be a chance where they can challenge the board on company direction and vote on resolutions such as executive remuneration. The data we present below explains why we think CEO compensation is not consistent with recent performance.

Comparing Vongroup Limited's CEO Compensation With The Industry

At the time of writing, our data shows that Vongroup Limited has a market capitalization of HK$110m, and reported total annual CEO compensation of HK$1.3m for the year to April 2024. Notably, that's an increase of 13% over the year before. We think total compensation is more important but our data shows that the CEO salary is lower, at HK$600k.

For comparison, other companies in the Hong Kong Real Estate industry with market capitalizations below HK$1.6b, reported a median total CEO compensation of HK$1.8m. So it looks like Vongroup compensates David Vong in line with the median for the industry. What's more, David Vong holds HK$57m 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 78% of total compensation represents salary and 22% is other remuneration. It's interesting to note that Vongroup allocates a smaller portion of compensation to salary in comparison to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

Vongroup Limited's Growth

Over the last three years, Vongroup Limited has shrunk its earnings per share by 9.5% per year. Its revenue is up 1.2% over the last year.

Overall this is not a very positive result for shareholders. The modest increase in revenue in the last year isn't enough to make us overlook the disappointing change in EPS. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. 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 Vongroup Limited Been A Good Investment?

Since shareholders would have lost about 9.0% over three years, some Vongroup Limited investors would surely be feeling negative emotions. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

To Conclude...

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.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. That's why we did our research, and identified 3 warning signs for Vongroup (of which 1 shouldn't be ignored!) that you should know about in order to have a holistic understanding of the stock.

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.