Key Insights

• Kwan On Holdings will host its Annual General Meeting on 25th of September
• Total pay for CEO Fangbing Zhang includes HK$590.0k salary
• Total compensation is 72% below industry average
• Kwan On Holdings' EPS declined by 84% over the past three years while total shareholder loss over the past three years was 54%

Shareholders may be wondering what CEO Fangbing Zhang plans to do to improve the less than great performance at Kwan On Holdings Limited (HKG:1559) recently. One way they can exercise their influence on management is through voting on resolutions, such as executive remuneration at the next AGM, coming up on 25th of September. Setting appropriate executive remuneration to align with the interests of shareholders may also be a way to influence the company performance in the long run. We have prepared some analysis below to show that CEO compensation looks to be reasonable.

See our latest analysis for Kwan On Holdings

How Does Total Compensation For Fangbing Zhang Compare With Other Companies In The Industry?

At the time of writing, our data shows that Kwan On Holdings Limited has a market capitalization of HK$204m, and reported total annual CEO compensation of HK$590k for the year to March 2023. That's a notable decrease of 32% on last year. It is worth noting that the CEO compensation consists entirely of the salary, worth HK$590k.

For comparison, other companies in the Hong Kong Construction industry with market capitalizations below HK$1.6b, reported a median total CEO compensation of HK$2.1m. In other words, Kwan On Holdings pays its CEO lower than the industry median.

Speaking on an industry level, nearly 88% of total compensation represents salary, while the remainder of 12% is other remuneration. Speaking on a company level, Kwan On Holdings prefers to tread along a traditional path, disbursing all compensation through a salary. 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 Kwan On Holdings Limited's Growth Numbers

Over the last three years, Kwan On Holdings Limited has shrunk its earnings per share by 84% per year. It achieved revenue growth of 21% over the last year.

Investors would be a bit wary of companies that have lower EPS On the other hand, the strong revenue growth suggests the business is growing. These two metrics are moving in different directions, so while it's hard to be confident judging performance, we think the stock is worth watching. 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 Kwan On Holdings Limited Been A Good Investment?

The return of -54% over three years would not have pleased Kwan On Holdings Limited shareholders. So shareholders would probably want the company to be less generous with CEO compensation.

To Conclude...

Kwan On Holdings rewards its CEO solely through a salary, ignoring non-salary benefits completely. The fact that shareholders are sitting on a loss is certainly disheartening. The poor performance of the share price might have something to do with the lack of earnings growth. In the upcoming AGM, shareholders should take this opportunity to raise these concerns with the board and revisit their investment thesis with regards to the company.

CEO pay is simply one of the many factors that need to be considered while examining business performance. We identified 4 warning signs for Kwan On Holdings (2 are a bit unpleasant!) that you should be aware of before investing here.

Important note: Kwan On 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.

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