Here's Why Shareholders May Want To Be Cautious With Increasing CPM Group Limited's (HKG:1932) CEO Pay Packet

Key Insights

• CPM Group to hold its Annual General Meeting on 5th of June
• Total pay for CEO Philip Tsui includes HK$5.64m salary
• Total compensation is 479% above industry average
• Over the past three years, CPM Group's EPS grew by 12% and over the past three years, the total loss to shareholders 40%

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Shareholders of CPM Group Limited (HKG:1932) will have been dismayed by the negative share price return over the last three years. What is concerning is that despite positive EPS growth, the share price has not tracked the trend in fundamentals. These are some of the concerns that shareholders may want to bring up at the next AGM held on 5th of June. They could also try to influence management and firm direction through voting on resolutions such as executive remuneration and other company matters. Here's our take on why we think shareholders may want to be cautious of approving a raise for the CEO at the moment.

See our latest analysis for CPM Group

How Does Total Compensation For Philip Tsui Compare With Other Companies In The Industry?

Our data indicates that CPM Group Limited has a market capitalization of HK$200m, and total annual CEO compensation was reported as HK$7.4m for the year to December 2024. That's just a smallish increase of 3.4% on last year. Notably, the salary which is HK$5.64m, represents most of the total compensation being paid.

On comparing similar-sized companies in the Hong Kong Chemicals industry with market capitalizations below HK$1.6b, we found that the median total CEO compensation was HK$1.3m. Accordingly, our analysis reveals that CPM Group Limited pays Philip Tsui north of the industry median.

On an industry level, roughly 83% of total compensation represents salary and 17% is other remuneration. There isn't a significant difference between CPM Group and the broader market, in terms of salary allocation in the overall compensation package. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.

CPM Group Limited's Growth

Over the past three years, CPM Group Limited has seen its earnings per share (EPS) grow by 12% per year. Its revenue is down 31% over the previous year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's always a tough situation when revenues are not growing, but ultimately profits are more important. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has CPM Group Limited Been A Good Investment?

Few CPM Group Limited shareholders would feel satisfied with the return of -40% over three years. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

Shareholders have not seen their shares grow in value, rather they have seen their shares decline. The fact that the stock price hasn't grown along with earnings may indicate that other issues may be affecting that stock. Shareholders would be keen to know what's holding the stock back when earnings have grown. These concerns should be addressed at the upcoming AGM, where shareholders can question the board and evaluate if their judgement and decision making is still in line with their expectations.

CEO pay is simply one of the many factors that need to be considered while examining business performance. That's why we did our research, and identified 2 warning signs for CPM Group (of which 1 is significant!) that you should know about in order to have a holistic understanding of the stock.

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.