Key Insights

• Ngai Hing Hong to hold its Annual General Meeting on 16th of November
• CEO Kwok Kwong Hui's total compensation includes salary of HK$2.31m
• The overall pay is 132% above the industry average
• Ngai Hing Hong's three-year loss to shareholders was 1.1% while its EPS was down 40% over the past three years

Shareholders will probably not be too impressed with the underwhelming results at Ngai Hing Hong Company Limited (HKG:1047) recently. At the upcoming AGM on 16th of November, shareholders can hear from the board including their plans for turning around performance. 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.

Check out our latest analysis for Ngai Hing Hong

How Does Total Compensation For Kwok Kwong Hui Compare With Other Companies In The Industry?

Our data indicates that Ngai Hing Hong Company Limited has a market capitalization of HK$148m, and total annual CEO compensation was reported as HK$4.4m for the year to June 2023. Notably, that's a decrease of 17% over the year before. In particular, the salary of HK$2.31m, makes up a fairly large portion of the total compensation being paid to the CEO.

In comparison with other companies in the Hong Kong Chemicals industry with market capitalizations under HK$1.6b, the reported median total CEO compensation was HK$1.9m. Accordingly, our analysis reveals that Ngai Hing Hong Company Limited pays Kwok Kwong Hui north of the industry median. What's more, Kwok Kwong Hui holds HK$7.9m 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, around 56% of total compensation represents salary and 44% is other remuneration. Ngai Hing Hong is largely mirroring the industry average when it comes to the share a salary enjoys in overall compensation. 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.

Ngai Hing Hong Company Limited's Growth

Over the last three years, Ngai Hing Hong Company Limited has shrunk its earnings per share by 40% per year. It saw its revenue drop 32% over the last year.

The decline in EPS is a bit concerning. And the impression is worse when you consider revenue is down year-on-year. 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 Ngai Hing Hong Company Limited Been A Good Investment?

Given the total shareholder loss of 1.1% over three years, many shareholders in Ngai Hing Hong Company Limited are probably rather dissatisfied, to say the least. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

In Summary...

Along with the business performing poorly, shareholders have suffered with poor share price returns on their investments, suggesting that there's little to no chance of them being in favor of a CEO 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.

CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. In our study, we found 2 warning signs for Ngai Hing Hong you should be aware of, and 1 of them doesn't sit too well with us.

Important note: Ngai Hing Hong 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.