What We Learned About Embry Holdings’ (HKG:1388) CEO Pay

The CEO of Embry Holdings Limited (HKG:1388) is Liza Cheng, and this article examines the executive’s compensation against the backdrop of overall company performance. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.

View our latest analysis for Embry Holdings

How Does Total Compensation For Liza Cheng Compare With Other Companies In The Industry?

Our data indicates that Embry Holdings Limited has a market capitalization of HK$435m, and total annual CEO compensation was reported as HK$3.7m for the year to December 2019. Notably, that’s a decrease of 26% over the year before. In particular, the salary of HK$2.88m, makes up a huge portion of the total compensation being paid to the CEO.

For comparison, other companies in the industry with market capitalizations below HK$1.6b, reported a median total CEO compensation of HK$2.4m. This suggests that Liza Cheng is paid more than the median for the industry. Furthermore, Liza Cheng directly owns HK$59m worth of shares in the company, implying that they are deeply invested in the company’s success.

Component20192018Proportion (2019)
Salary HK$2.9m HK$2.9m 78%
Other HK$791k HK$2.1m 22%
Total CompensationHK$3.7m HK$5.0m100%

On an industry level, around 92% of total compensation represents salary and 8.2% is other remuneration. Embry Holdings pays a modest slice of remuneration through salary, as compared to the broader industry. If total compensation veers towards salary, it suggests that the variable portion – which is generally tied to performance, is lower.

ceo-compensation
SEHK:1388 CEO Compensation July 28th 2020

A Look at Embry Holdings Limited’s Growth Numbers

Over the last three years, Embry Holdings Limited has shrunk its earnings per share by 7.0% per year. It saw its revenue drop 7.5% over the last year.

Overall this is not a very positive result for shareholders. And the impression is worse when you consider revenue is down year-on-year. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. While we don’t have analyst forecasts for the company, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.

Has Embry Holdings Limited Been A Good Investment?

With a three year total loss of 54% for the shareholders, Embry Holdings Limited would certainly have some dissatisfied shareholders. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude…

As we touched on above, Embry Holdings Limited is currently paying its CEO higher than the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. Disappointingly, share price gains over the last three years have failed to materialize. Arguably worse, we’ve been waiting for positive earnings growth for the last three years. Overall, with such poor performance, shareholder’s would probably have questions if the company decided to give the CEO a raise.

CEO compensation can have a massive impact on performance, but it’s just one element. That’s why we did some digging and identified 3 warning signs for Embry Holdings that you should be aware of before investing.

Important note: Embry Holdings is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.

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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. 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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