Key Insights

• CEC International Holdings to hold its Annual General Meeting on 29th of September
• Salary of HK$5.29m is part of CEO Fung Kwan Tang's total remuneration
• Total compensation is 253% above industry average
• CEC International Holdings' three-year loss to shareholders was 43% while its EPS grew by 59% over the past three years

Shareholders of CEC International Holdings Limited (HKG:759) will have been dismayed by the negative share price return over the last three years. What is concerning is that despite positive EPS growth, the share price has not tracked the trend in fundamentals. Shareholders may want to question the board on the future direction of the company at the upcoming AGM on 29th of September. They could also try to influence management and firm direction through voting on resolutions such as executive remuneration and other company matters. Here's our take on why we think shareholders may want to be cautious of approving a raise for the CEO at the moment.

View our latest analysis for CEC International Holdings

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

According to our data, CEC International Holdings Limited has a market capitalization of HK$236m, and paid its CEO total annual compensation worth HK$7.2m over the year to April 2023. Notably, that's an increase of 11% over the year before. Notably, the salary which is HK$5.29m, represents most of the total compensation being paid.

For comparison, other companies in the Hong Kong Consumer Retailing industry with market capitalizations below HK$1.6b, reported a median total CEO compensation of HK$2.0m. This suggests that Fung Kwan Tang is paid more than the median for the industry. Moreover, Fung Kwan Tang also holds HK$1.5m worth of CEC International Holdings stock directly under their own name.

Speaking on an industry level, nearly 76% of total compensation represents salary, while the remainder of 24% is other remuneration. Although there is a difference in how total compensation is set, CEC International Holdings more or less reflects the market in terms of setting the salary. 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.

CEC International Holdings Limited's Growth

CEC International Holdings Limited's earnings per share (EPS) grew 59% per year over the last three years. It saw its revenue drop 16% over the last year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's always a tough situation when revenues are not growing, but ultimately profits are more important. 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 CEC International Holdings Limited Been A Good Investment?

With a total shareholder return of -43% 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...

Shareholders have not seen their shares grow in value, rather they have seen their shares decline. The stock's movement is disjointed with the company's earnings growth, which ideally should move in the same direction. Shareholders would be keen to know what's holding the stock back when earnings have grown. These concerns should be addressed at the upcoming AGM, where shareholders can question the board and evaluate if their judgement and decision making is still in line with their expectations.

While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. That's why we did some digging and identified 2 warning signs for CEC International Holdings that you should be aware of before investing.

Switching gears from CEC International Holdings, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.

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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.