This Is Why Shareholders May Want To Hold Back On A Pay Rise For International Business Settlement Holdings Limited’s (HKG:147) CEO

Cecilia Nysing

The underwhelming performance at International Business Settlement Holdings Limited (HKG:147) recently has probably not pleased shareholders. The next AGM coming up on 30 August 2021 will be a chance for shareholders to have their concerns addressed by the board, challenge management on company strategy and vote on resolutions such as executive remuneration, which may help change the company’s future prospects. The data we gathered below shows that CEO compensation looks acceptable for now.

Check out our latest analysis for International Business Settlement Holdings

Comparing International Business Settlement Holdings Limited’s CEO Compensation With the industry

At the time of writing, our data shows that International Business Settlement Holdings Limited has a market capitalization of HK$1.5b, and reported total annual CEO compensation of HK$960k for the year to March 2021. This was the same as last year. Notably, the salary of HK$960k is the entirety of the CEO compensation.

For comparison, other companies in the same industry with market capitalizations ranging between HK$779m and HK$3.1b had a median total CEO compensation of HK$2.8m. Accordingly, International Business Settlement Holdings pays its CEO under the industry median.

Component 2021 2020 Proportion (2021)
Salary HK$960k HK$960k 100%
Total Compensation HK$960k HK$960k 100%

On an industry level, roughly 70% of total compensation represents salary and 30% is other remuneration. At the company level, International Business Settlement Holdings pays Leong Yuen solely through a salary, preferring to go down a conventional route. If total compensation veers towards salary, it suggests that the variable portion – which is generally tied to performance, is lower.

SEHK:147 CEO Compensation August 23rd 2021

International Business Settlement Holdings Limited’s Growth

International Business Settlement Holdings Limited has reduced its earnings per share by 22% a year over the last three years. Its revenue is down 78% over the previous year.

Few shareholders would be pleased to read that EPS have declined. 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. 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 International Business Settlement Holdings Limited Been A Good Investment?

With a total shareholder return of -64% over three years, International Business Settlement Holdings Limited shareholders would by and large be disappointed. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

In Summary…

International Business Settlement Holdings rewards its CEO solely through a salary, ignoring non-salary benefits completely. 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, 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 a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. We did our research and spotted 1 warning sign for International Business Settlement Holdings that investors should look into moving forward.

Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.

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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.
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