We believe shareholders may want to consider a review of the CEO compensation package of China Ting Group Holdings Limited (HKG:3398)

Key ideas

• China Ting Group Holdings Annual General Meeting to be Held on July 12
• CEO Hung Yi Ting’s total compensation includes a salary of HK$1.80 million
• Total compensation is similar to the industry average
• Over the past three years, China Ting Group Holdings’ EPS has fallen by 55% and over the past three years, the total loss to shareholders has been 38%.

China Ting Group Holdings Limited (HKG:3398) has not performed well recently and CEO Hung Yi Ting will likely need to up his game. Shareholders can take the opportunity to hold the board and management to account for the underperformance at the upcoming AGM on July 12. This would also be an opportunity for shareholders to influence management by voting on company resolutions such as executive pay, which could have a significant impact on the business. The data we present below explains why we believe the CEO’s pay is not consistent with recent performance.

Check out our latest analysis for China Ting Group Holdings

How does Hung Yi Ting’s total compensation compare to other companies in the industry?

According to our data, China Ting Group Holdings Limited has a market capitalization of HK$420m, and paid its CEO total annual compensation of HK$1.8m in the year to December 2023. This is a notable decrease of 40% from last year. Notably, the HK$1.80m salary represents a significant portion of the total compensation paid to the CEO.

Compared to other Hong Kong luxury goods companies with market capitalizations below HK$1.6 billion, the median reported total CEO compensation is HK$2.0 million. We conclude that Hung Yi Ting is paid about the average for CEOs in the industry.

Component	2023	2022	Proportion (2023)
Salary	1.8 million Hong Kong dollars	3.0 million Hong Kong dollars	99%
Other	HK$18,000	HK$18,000	1%
Full compensation	1.8 million Hong Kong dollars	3.0 million Hong Kong dollars	100%

At the industry level, nearly 94% of total compensation is salary, while the remaining 6% is made up of other compensation. China Ting Group Holdings pays a high salary, with a greater focus on this aspect of compensation than non-salary compensation. If total compensation is tilted towards salary, this suggests that the variable portion, which is typically linked to performance, is lower.

Growth of China Ting Group Holdings Limited

Over the past three years, China Ting Group Holdings Limited has seen its earnings per share decline by 55% per year. Its revenue has fallen by 5.4% over the past year.

Few shareholders would be happy to hear that EPS has declined. And it looks even worse when you consider that revenue is down year over year. Given this relatively weak performance, shareholders probably won’t want to see high CEO compensation. While we don’t have analyst forecasts for the company, shareholders may want to examine this detailed historical graph of earnings, revenue and cash flow.

Is China Ting Group Holdings Limited a good investment?

With a total shareholder return of -38% over three years, China Ting Group Holdings Limited shareholders would be disappointed overall. They would therefore probably wish the company were less generous with CEO compensation.

To conclude…

Hung Yi receives almost all of his compensation in the form of salary. In addition to the company’s poor performance, shareholders have suffered from poor stock market returns on their investments, suggesting that there is little or no chance that they will support an increase in CEO compensation. At the next shareholders’ meeting, the board will have the opportunity to explain what steps it plans to take to improve the company’s performance.

CEO compensation is an important area to watch, but we also need to pay attention to other company attributes. That’s why we did our research and identified 3 Warning Signs for China Ting Group Holdings (2 of which are potentially serious!) that you need to know to have a comprehensive understanding of the stock.

It can be said that the quality of the company is much more important than the level of CEO compensation. So, take a look at this free list of interesting companies that have high return on equity and low debt.

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This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts using only unbiased methodology and our articles are not intended to constitute financial advice. This is not a recommendation to buy or sell any stock, and does not take into account your objectives or financial situation. Our goal is to provide you with focused, long-term analysis based on fundamental data. Please note that our analysis may not factor in the latest price-sensitive company announcements or qualitative information. Simply Wall St has no position in any of the stocks mentioned.

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