Is Shun Wo Group Holdings Limited's (HKG:1591) CEO Being Overpaid?

By
Simply Wall St
Published
April 23, 2020

The CEO of Shun Wo Group Holdings Limited (HKG:1591) is Tony Wong. First, this article will compare CEO compensation with compensation at similar sized companies. Then we'll look at a snap shot of the business growth. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. The aim of all this is to consider the appropriateness of CEO pay levels.

Check out our latest analysis for Shun Wo Group Holdings

How Does Tony Wong's Compensation Compare With Similar Sized Companies?

According to our data, Shun Wo Group Holdings Limited has a market capitalization of HK$96m, and paid its CEO total annual compensation worth HK$2.0m over the year to March 2019. Notably, the salary of HK$2.0m is the vast majority of the CEO compensation. We looked at a group of companies with market capitalizations under HK$1.6b, and the median CEO total compensation was HK$1.8m.

Now let's take a look at the pay mix on an industry and company level to gain a better understanding of where Shun Wo Group Holdings stands. On a sector level, around 90% of total compensation represents salary and 10% is other remuneration. Investors will find it interesting that Shun Wo Group Holdings pays the bulk of its rewards through a traditional salary, instead of non-salary benefits.

That means Tony Wong receives fairly typical remuneration for the CEO of a company that size. This doesn't tell us a whole lot on its own, but looking at the performance of the actual business will give us useful context. You can see a visual representation of the CEO compensation at Shun Wo Group Holdings, below.

SEHK:1591 CEO Compensation April 23rd 2020

Is Shun Wo Group Holdings Limited Growing?

Shun Wo Group Holdings Limited has reduced its earnings per share by an average of 114% a year, over the last three years (measured with a line of best fit). It achieved revenue growth of 4.6% over the last year.

Few shareholders would be pleased to read that earnings per share are lower over three years. The fairly low revenue growth fails to impress given that the earnings per share is down. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Although we don't have analyst forecasts shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.

Has Shun Wo Group Holdings Limited Been A Good Investment?

With a three year total loss of 79%, Shun Wo Group Holdings Limited would certainly have some dissatisfied shareholders. So shareholders would probably think the company shouldn't be too generous with CEO compensation.

In Summary...

Tony Wong is paid around what is normal for the leaders of comparable size companies.

Returns have been disappointing and the company is not growing its earnings per share. Most would consider it prudent for the company to hold off any CEO pay rise until performance improves. Shifting gears from CEO pay for a second, we've spotted 3 warning signs for Shun Wo Group Holdings you should be aware of, and 1 of them is a bit concerning.

Important note: Shun Wo Group Holdings may not be the best stock to buy. You might find something better in this list of interesting companies with high ROE and low debt.

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.

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. Thank you for reading.

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