Here's Why Shareholders Should Examine Skyworth Group Limited's (HKG:751) CEO Compensation Package More Closely

Key Insights

• Skyworth Group's Annual General Meeting to take place on 23rd of May
• Total pay for CEO Chi Shi includes CN¥3.06m salary
• Total compensation is 2,510% above industry average
• Over the past three years, Skyworth Group's EPS fell by 30% and over the past three years, the total loss to shareholders 22%

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The results at Skyworth Group Limited (HKG:751) have been quite disappointing recently and CEO Chi Shi bears some responsibility for this. At the upcoming AGM on 23rd of May, shareholders can hear from the board including their plans for turning around performance. 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 Skyworth Group

How Does Total Compensation For Chi Shi Compare With Other Companies In The Industry?

Our data indicates that Skyworth Group Limited has a market capitalization of HK$6.7b, and total annual CEO compensation was reported as CN¥35m for the year to December 2024. Notably, that's a decrease of 52% over the year before. We think total compensation is more important but our data shows that the CEO salary is lower, at CN¥3.1m.

On comparing similar companies from the Hong Kong Consumer Durables industry with market caps ranging from HK$3.1b to HK$13b, we found that the median CEO total compensation was CN¥1.3m. Hence, we can conclude that Chi Shi is remunerated higher than the industry median. Moreover, Chi Shi also holds HK$139m worth of Skyworth Group stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Speaking on an industry level, nearly 81% of total compensation represents salary, while the remainder of 19% is other remuneration. Skyworth Group sets aside a smaller share of compensation for salary, in comparison to the overall industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

A Look at Skyworth Group Limited's Growth Numbers

Skyworth Group Limited has reduced its earnings per share by 30% a year over the last three years. Its revenue is down 5.0% over the previous year.

Overall this is not a very positive result for shareholders. And the fact that revenue is down year on year arguably paints an ugly picture. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.

Has Skyworth Group Limited Been A Good Investment?

Since shareholders would have lost about 22% over three years, some Skyworth Group Limited investors would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

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, management will get a chance to explain how they plan to get the business back on track and address the concerns from investors.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. We've identified 1 warning sign for Skyworth Group that investors should be aware of in a dynamic business environment.

Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies that have HIGH return on equity 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.