Is Hong Kong Shanghai Alliance Holdings Limited (HKG:1001) Overpaying Its CEO?

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Andrew Yao has been the CEO of Hong Kong Shanghai Alliance Holdings Limited (HKG:1001) since 2015. This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. Then we’ll look at a snap shot of the business growth. And finally – as a second measure of performance – we will look at the returns shareholders have received over the last few years. The aim of all this is to consider the appropriateness of CEO pay levels.

View 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$372m, and total annual CEO compensation is HK$10.0m. (This figure is for the year to March 2018). We think total compensation is more important but we note that the CEO salary is lower, at HK$2.0m. We took a group of companies with market capitalizations below HK$1.6b, and calculated the median CEO total compensation to be HK$1.7m.

As you can see, Andrew Yao is paid more than the median CEO pay at companies of a similar size, in the same market. However, this does not necessarily mean Hong Kong Shanghai Alliance Holdings Limited is paying too much. We can better assess whether the pay is overly generous by looking into the underlying business performance.

You can see, below, how CEO compensation at Hong Kong Shanghai Alliance Holdings has changed over time.

SEHK:1001 CEO Compensation, June 6th 2019
SEHK:1001 CEO Compensation, June 6th 2019

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 103% per year (measured with a line of best fit). In the last year, its revenue is down -8.8%.

Unfortunately, earnings per share have trended lower over the last three years. 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. 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?

Given the total loss of 14% over three years, many shareholders in Hong Kong Shanghai Alliance Holdings Limited are probably rather dissatisfied, to say the least. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary…

We examined the amount Hong Kong Shanghai Alliance Holdings Limited pays its CEO, and compared it to the amount paid by similar sized companies. As discussed above, we discovered that the company pays more than the median of that group.

We think many shareholders would be underwhelmed with the business growth over the last three years.

Just as bad, share price gains for investors have failed to materialize, over the same period. 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 Hong Kong Shanghai Alliance Holdings shares (free trial).

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.

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.