Is V.S. International Group Limited’s (HKG:1002) CEO Pay Justified?

In 2001 Sem Gan was appointed CEO of V.S. International Group Limited (HKG:1002). First, this article will compare CEO compensation with compensation at similar sized companies. After that, we will consider the growth in the business. And finally – as a second measure of performance – we will look at the returns shareholders have received over the last few years. This method should give us information to assess how appropriately the company pays the CEO.

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How Does Sem Gan’s Compensation Compare With Similar Sized Companies?

According to our data, V.S. International Group Limited has a market capitalization of HK$228m, and pays its CEO total annual compensation worth CN¥2.1m. (This figure is for the year to 2018). That’s below the compensation, last year. While we always look at total compensation first, we note that the salary component is less, at CN¥1.7m. We looked at a group of companies with market capitalizations under CN¥1.4b, and the median CEO compensation was CN¥1.4m.

It would therefore appear that V.S. International Group Limited pays Sem Gan more than the median CEO remuneration at companies of a similar size, in the same market. However, this fact alone doesn’t mean the remuneration 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.

You can see a visual representation of the CEO compensation at V.S. International Group, below.

SEHK:1002 CEO Compensation January 22nd 19
SEHK:1002 CEO Compensation January 22nd 19

Is V.S. International Group Limited Growing?

On average over the last three years, V.S. International Group Limited has grown earnings per share (EPS) by 55% each year (using a line of best fit). It saw its revenue drop -17% over the last year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. While it would be good to see revenue growth, profits matter more in the end.

Although we don’t have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has V.S. International Group Limited Been A Good Investment?

Since shareholders would have lost about 68% over three years, some V.S. International Group Limited shareholders would surely be feeling negative emotions. It therefore might be upsetting for shareholders if the CEO were paid generously.

In Summary…

We compared total CEO remuneration at V.S. International Group Limited with the amount paid at companies with a similar market capitalization. We found that it pays well over the median amount paid in the benchmark group.

However, the earnings per share growth over three years is certainly impressive. However, the returns to investors are far less impressive, over the same period. While EPS is positive, we’d say shareholders would want better returns before the CEO is paid much more. Shareholders may want to check for free if V.S. International Group insiders are buying or selling shares.

Or you could feast your eyes on this interactive graph depicting past earnings, cash flow and revenue.

To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.