Here's Why Shareholders Should Examine Continental Holdings Limited's (HKG:513) CEO Compensation Package More Closely

Key Insights

• Continental Holdings to hold its Annual General Meeting on 2nd of December
• Salary of HK$1.20m is part of CEO Shirley Cheng's total remuneration
• Total compensation is similar to the industry average
• Over the past three years, Continental Holdings' EPS fell by 121% and over the past three years, the total loss to shareholders 53%

Continental Holdings Limited (HKG:513) has not performed well recently and CEO Shirley Cheng will probably need to up their game. Shareholders can take the chance to hold the board and management accountable for the unsatisfactory performance at the next AGM on 2nd of December. They will also get a chance to influence managerial decision-making through voting on resolutions such as executive remuneration, which may impact firm value in the future. The data we present below explains why we think CEO compensation is not consistent with recent performance.

View our latest analysis for Continental Holdings

Comparing Continental Holdings Limited's CEO Compensation With The Industry

Our data indicates that Continental Holdings Limited has a market capitalization of HK$116m, and total annual CEO compensation was reported as HK$1.4m for the year to June 2024. This was the same as last year. Notably, the salary which is HK$1.20m, represents most of the total compensation being paid.

For comparison, other companies in the Hong Kong Luxury industry with market capitalizations below HK$1.6b, reported a median total CEO compensation of HK$1.9m. So it looks like Continental Holdings compensates Shirley Cheng in line with the median for the industry.

Component	2024	2023	Proportion (2024)
Salary	HK$1.2m	HK$1.2m	89%
Other	HK$154k	HK$154k	11%
Total Compensation	HK$1.4m	HK$1.4m	100%

On an industry level, roughly 87% of total compensation represents salary and 13% is other remuneration. Although there is a difference in how total compensation is set, Continental Holdings more or less reflects the market in terms of setting the salary. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

A Look at Continental Holdings Limited's Growth Numbers

Over the last three years, Continental Holdings Limited has shrunk its earnings per share by 121% per year. Its revenue is down 21% over the previous year.

The decline in EPS is a bit concerning. And the impression is worse when you consider revenue is down year-on-year. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Continental Holdings Limited Been A Good Investment?

The return of -53% over three years would not have pleased Continental Holdings Limited shareholders. So shareholders would probably want the company to be less generous with CEO compensation.

To Conclude...

Given that shareholders haven't seen any positive returns on their investment, not to mention the lack of earnings growth, this may suggest that few of them would be willing to award the CEO with a pay rise. At the upcoming AGM, they can question the management's plans and strategies to turn performance around and reassess their investment thesis in regards to the company.

CEO pay is simply one of the many factors that need to be considered while examining business performance. In our study, we found 3 warning signs for Continental Holdings you should be aware of, and 2 of them are potentially serious.

Switching gears from Continental 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.