Key Insights

• EDICO Holdings' Annual General Meeting to take place on 29th of February
• Salary of HK$1.65m is part of CEO Amy Donati's total remuneration
• Total compensation is similar to the industry average
• EDICO Holdings' three-year loss to shareholders was 31% while its EPS was down 96% over the past three years

Shareholders will probably not be too impressed with the underwhelming results at EDICO Holdings Limited (HKG:8450) recently. Shareholders will be interested in what the board will have to say about turning performance around at the next AGM on 29th of February. This will be also be a chance where they can challenge the board on company direction and vote on resolutions such as executive remuneration. We present the case why we think CEO compensation is out of sync with company performance.

How Does Total Compensation For Amy Donati Compare With Other Companies In The Industry?

At the time of writing, our data shows that EDICO Holdings Limited has a market capitalization of HK$46m, and reported total annual CEO compensation of HK$1.8m for the year to September 2023. That's a slight decrease of 4.3% on the prior year. In particular, the salary of HK$1.65m, makes up a huge portion of the total compensation being paid to the CEO.

On comparing similar-sized companies in the Hong Kong Commercial Services industry with market capitalizations below HK$1.6b, we found that the median total CEO compensation was HK$1.9m. This suggests that EDICO Holdings remunerates its CEO largely in line with the industry average.

Talking in terms of the industry, salary represented approximately 81% of total compensation out of all the companies we analyzed, while other remuneration made up 19% of the pie. EDICO Holdings is paying a higher share of its remuneration through a salary in comparison to the overall industry. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

EDICO Holdings Limited's Growth

Over the last three years, EDICO Holdings Limited has shrunk its earnings per share by 96% per year. Its revenue is up 2.4% over the last year.

Overall this is not a very positive result for shareholders. And the modest revenue growth over 12 months isn't much comfort against the reduced EPS. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. 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 EDICO Holdings Limited Been A Good Investment?

Few EDICO Holdings Limited shareholders would feel satisfied with the return of -31% over three years. So shareholders would probably want the company to be less generous with CEO compensation.

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.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. We've identified 3 warning signs for EDICO Holdings that investors should be aware of in a dynamic business environment.

Important note: EDICO 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.

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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.