Is Hong Kong Shanghai Alliance Holdings Limited’s (HKG:1001) CEO Being Overpaid?

Andrew Yao became the CEO of Hong Kong Shanghai Alliance Holdings Limited (HKG:1001) in 2015. 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. This process should give us an idea about how appropriately the CEO is paid.

See our latest analysis for Hong Kong Shanghai Alliance Holdings

How Does Andrew Yao’s Compensation Compare With Similar Sized Companies?

Our data indicates that Hong Kong Shanghai Alliance Holdings Limited is worth HK$295m, and total annual CEO compensation was reported as HK$11m for the year to March 2019. We think total compensation is more important but we note that the CEO salary is lower, at HK$7.2m. We looked at a group of companies with market capitalizations under HK$1.6b, and the median CEO total compensation was HK$1.8m.

Thus we can conclude that Andrew Yao receives more in total compensation than the median of a group of companies in the same market, and of similar size to Hong Kong Shanghai Alliance Holdings Limited. However, this doesn’t necessarily mean the pay is too high. A closer look at the performance of the underlying business will give us a better idea about whether the pay is particularly generous.

The graphic below shows how CEO compensation at Hong Kong Shanghai Alliance Holdings has changed from year to year.

SEHK:1001 CEO Compensation, January 20th 2020
SEHK:1001 CEO Compensation, January 20th 2020

Is Hong Kong Shanghai Alliance Holdings Limited Growing?

Over the last three years Hong Kong Shanghai Alliance Holdings Limited has shrunk its earnings per share by an average of 59% per year (measured with a line of best fit). In the last year, its revenue is down 9.0%.

Unfortunately, earnings per share have trended lower over the last three years. 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. Although we don’t have analyst forecasts you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Hong Kong Shanghai Alliance Holdings Limited Been A Good Investment?

With a three year total loss of 38%, Hong Kong Shanghai Alliance 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 the total CEO remuneration paid by Hong Kong Shanghai Alliance Holdings Limited, and compared it to remuneration at a group of similar sized companies. 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. Arguably worse, investors are without a positive return for the last three years. This analysis suggests to us that the CEO is paid too generously! Shareholders may want to check for free if Hong Kong Shanghai Alliance Holdings insiders are buying or selling shares.

Important note: Hong Kong Shanghai Alliance 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.

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.

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