Is ELL Environmental Holdings Limited's (HKG:1395) CEO Overpaid Relative To Its Peers?

Kwan Chan has been the CEO of ELL Environmental Holdings Limited (HKG:1395) since 2014. First, this article will compare CEO compensation with compensation at similar sized companies. Next, we'll consider growth that the business demonstrates. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. The aim of all this is to consider the appropriateness of CEO pay levels.

Check out our latest analysis for ELL Environmental Holdings

How Does Kwan Chan's Compensation Compare With Similar Sized Companies?

Our data indicates that ELL Environmental Holdings Limited is worth HK$169m, and total annual CEO compensation was reported as HK$3.8m for the year to December 2018. While we always look at total compensation first, we note that the salary component is less, at HK$1.8m. We looked at a group of companies with market capitalizations under HK$1.6b, and the median CEO total compensation was HK$1.9m.

Thus we can conclude that Kwan Chan receives more in total compensation than the median of a group of companies in the same market, and of similar size to ELL Environmental Holdings Limited. However, this doesn't necessarily mean the pay is too high. We can better assess whether the pay is overly generous by looking into the underlying business performance.

You can see a visual representation of the CEO compensation at ELL Environmental Holdings, below.

Is ELL Environmental Holdings Limited Growing?

On average over the last three years, ELL Environmental Holdings Limited has shrunk earnings per share by 95% each year (measured with a line of best fit). In the last year, its revenue is down -27%.

Sadly for shareholders, earnings per share are actually down, over three years. And the fact that revenue is down year on year arguably paints an ugly picture. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration.

Has ELL Environmental Holdings Limited Been A Good Investment?

With a three year total loss of 64%, ELL Environmental Holdings Limited would certainly have some dissatisfied shareholders. So shareholders would probably think the company shouldn't be too generous with CEO compensation.

In Summary...

We compared total CEO remuneration at ELL Environmental Holdings Limited with the amount paid at companies with a similar market capitalization. We found that it pays well over the median amount paid in the benchmark group.

We think many shareholders would be underwhelmed with the business growth over the last three years. Over the same period, investors would have come away with nothing in the way of share price gains. Some might well form the view that the CEO is paid too generously! Whatever your view on compensation, you might want to check if insiders are buying or selling ELL Environmental Holdings shares (free trial).

Important note: ELL Environmental Holdings may not be the best stock to buy. You might find something better in this list of interesting companies with high ROE and low debt.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.