What Can We Make Of SFK Construction Holdings' (HKG:1447) CEO Compensation?

The CEO of SFK Construction Holdings Limited (HKG:1447) is Ki Chun Chan, 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 SFK Construction Holdings

How Does Total Compensation For Ki Chun Chan Compare With Other Companies In The Industry?

According to our data, SFK Construction Holdings Limited has a market capitalization of HK$248m, and paid its CEO total annual compensation worth HK$1.7m over the year to December 2019. That is, the compensation was roughly the same as last year. Notably, the salary which is HK$1.59m, represents most of the total compensation being paid.

In comparison with other companies in the industry with market capitalizations under HK$1.6b, the reported median total CEO compensation was HK$2.0m. From this we gather that Ki Chun Chan is paid around the median for CEOs in the industry.

Talking in terms of the industry, salary represented approximately 91% of total compensation out of all the companies we analyzed, while other remuneration made up 8.7% of the pie. Investors will find it interesting that SFK Construction Holdings pays the bulk of its rewards through a traditional salary, instead of non-salary benefits. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

A Look at SFK Construction Holdings Limited's Growth Numbers

SFK Construction Holdings Limited has reduced its earnings per share by 71% a year over the last three years. Its revenue is down 30% over the previous year.

The decline in EPS is a bit concerning. 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. 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 SFK Construction Holdings Limited Been A Good Investment?

With a three year total loss of 77% for the shareholders, SFK Construction 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...

Ki Chun receives almost all of their compensation through a salary. As previously discussed, Ki Chun is compensated close to the median for companies of its size, and which belong to the same industry. In the meantime, the company has reported declining EPS growth and shareholder returns over the last three years. It's tough to call out the compensation as inappropriate, but shareholders might not favor a raise before company performance improves.

CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. In our study, we found 5 warning signs for SFK Construction Holdings you should be aware of, and 1 of them can't be ignored.

Important note: SFK Construction 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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