This article will reflect on the compensation paid to Neil Howard who has served as CEO of IBI Group Holdings Limited (HKG:1547) since 2016. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.
See our latest analysis for IBI Group Holdings
How Does Total Compensation For Neil Howard Compare With Other Companies In The Industry?
At the time of writing, our data shows that IBI Group Holdings Limited has a market capitalization of HK$204m, and reported total annual CEO compensation of HK$4.0m for the year to March 2020. We note that's an increase of 9.1% above last year. In particular, the salary of HK$2.44m, makes up a huge portion of the total compensation being paid to the CEO.
On comparing similar-sized companies in the industry with market capitalizations below HK$1.6b, we found that the median total CEO compensation was HK$1.9m. This suggests that Neil Howard is paid more than the median for the industry. Furthermore, Neil Howard directly owns HK$104m worth of shares in the company, implying that they are deeply invested in the company's success.
| Component | 2020 | 2019 | Proportion (2020) |
| Salary | HK$2.4m | HK$2.4m | 62% |
| Other | HK$1.5m | HK$1.3m | 38% |
| Total Compensation | HK$4.0m | HK$3.6m | 100% |
On an industry level, around 91% of total compensation represents salary and 8.8% is other remuneration. In IBI Group Holdings' case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.
IBI Group Holdings Limited's Growth
Over the last three years, IBI Group Holdings Limited has shrunk its earnings per share by 14% per year. It saw its revenue drop 9.9% over the last year.
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. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.
Has IBI Group Holdings Limited Been A Good Investment?
Since shareholders would have lost about 36% over three years, some IBI Group Holdings Limited investors would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.
To Conclude...
As we noted earlier, IBI Group Holdings pays its CEO higher than the norm for similar-sized companies belonging 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. Overall, with such poor performance, shareholder's would probably have questions if the company decided to give the CEO a raise.
While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. We've identified 3 warning signs for IBI Group Holdings that investors should be aware of in a dynamic business environment.
Important note: IBI Group 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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About SEHK:1547
IBI Group Holdings
An investment holding company, offers interior fit-outs, building refurbishments, and other building services in Hong Kong, Macau, and Ireland.
Adequate balance sheet slight.
