Patrick Wang has been the CEO of Johnson Electric Holdings Limited (HKG:179) since 1996, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also assess whether Johnson Electric Holdings pays its CEO appropriately, considering recent earnings growth and total shareholder returns.
See our latest analysis for Johnson Electric Holdings
How Does Total Compensation For Patrick Wang Compare With Other Companies In The Industry?
At the time of writing, our data shows that Johnson Electric Holdings Limited has a market capitalization of HK$21b, and reported total annual CEO compensation of US$2.5m for the year to March 2020. That's a notable decrease of 22% on last year. While we always look at total compensation first, our analysis shows that the salary component is less, at US$922k.
On examining similar-sized companies in the industry with market capitalizations between HK$16b and HK$50b, we discovered that the median CEO total compensation of that group was US$947k. Accordingly, our analysis reveals that Johnson Electric Holdings Limited pays Patrick Wang north of the industry median. Moreover, Patrick Wang also holds HK$33m worth of Johnson Electric Holdings stock directly under their own name, which reveals to us that they have a significant personal stake in the company.
| Component | 2020 | 2019 | Proportion (2020) |
| Salary | US$922k | US$922k | 37% |
| Other | US$1.5m | US$2.3m | 63% |
| Total Compensation | US$2.5m | US$3.2m | 100% |
Speaking on an industry level, nearly 70% of total compensation represents salary, while the remainder of 30% is other remuneration. It's interesting to note that Johnson Electric Holdings allocates a smaller portion of compensation to salary in comparison to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.
Johnson Electric Holdings Limited's Growth
Over the last three years, Johnson Electric Holdings Limited has shrunk its earnings per share by 88% per year. In the last year, its revenue is down 10%.
The decline in EPS is a bit concerning. This is compounded by the fact revenue is actually down on last year. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.
Has Johnson Electric Holdings Limited Been A Good Investment?
Given the total shareholder loss of 12% over three years, many shareholders in Johnson Electric Holdings Limited are probably rather dissatisfied, to say the least. So shareholders would probably want the company to be lessto generous with CEO compensation.
To Conclude...
As previously discussed, Patrick is compensated more than what is normal for CEOs of companies of similar size, and which belong to the same industry. Disappointingly, share price gains over the last three years have failed to materialize. Arguably worse, we've been waiting for positive EPS growth for the last three years. Considering such poor performance, we think shareholders might be concerned if the CEO's compensation were to grow.
CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. We've identified 1 warning sign for Johnson Electric Holdings that investors should be aware of in a dynamic business environment.
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. 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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About SEHK:179
Johnson Electric Holdings
An investment holding company, engages in the manufacture and sale of motion systems worldwide.
Flawless balance sheet, undervalued and pays a dividend.
