Jian Dai became the CEO of Yat Sing Holdings Limited (HKG:3708) in 2017. This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. 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.
How Does Jian Dai’s Compensation Compare With Similar Sized Companies?
Our data indicates that Yat Sing Holdings Limited is worth HK$979m, and total annual CEO compensation was reported as HK$1.2m for the year to June 2019. Notably, the salary of HK$1.2m is the vast majority of the CEO compensation. We looked at a group of companies with market capitalizations under HK$1.6b, and the median CEO total compensation was HK$1.8m.
Next, let’s break down remuneration compositions to understand how the industry and company compare with each other. On a sector level, around 90% of total compensation represents salary and 10% is other remuneration. Yat Sing Holdings has gone down a largely traditional route, paying Jian Dai a high salary, giving it preference as a compensation method to non-salary benefits.
This would give shareholders a good impression of the company, since most similar size companies have to pay more, leaving less for shareholders. While this is a good thing, you’ll need to understand the business better before you can form an opinion. The graphic below shows how CEO compensation at Yat Sing Holdings has changed from year to year.
Is Yat Sing Holdings Limited Growing?
Over the last three years Yat Sing Holdings Limited has shrunk its earnings per share by an average of 95% per year (measured with a line of best fit). It saw its revenue drop 18% over the last year.
Sadly for shareholders, earnings per share are actually down, over three years. This is compounded by the fact revenue is actually down on last year. These factors suggest that the business performance wouldn’t really justify a high pay packet for the CEO. We don’t have analyst forecasts, but you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.
Has Yat Sing Holdings Limited Been A Good Investment?
Since shareholders would have lost about 85% over three years, some Yat Sing Holdings Limited shareholders would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.
It appears that Yat Sing Holdings Limited remunerates its CEO below most similar sized companies.
The compensation paid to Jian Dai is lower than is usual at similar sized companies, but the eps growth is lacking, just like the returns (over three years). Considering all these factors, we’d stop short of saying the CEO pay is too high, but we don’t think shareholders would want to see a pay rise before business performance improves. On another note, Yat Sing Holdings has 2 warning signs (and 1 which can’t be ignored) we think you should know about.
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.
If you spot an error that warrants correction, please contact the editor at email@example.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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