Man Ching Lau is the CEO of SH Group (Holdings) Limited (HKG:1637), and in this article, we analyze the executive's compensation package with respect to the overall performance of the company. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for SH Group (Holdings).
See our latest analysis for SH Group (Holdings)
Comparing SH Group (Holdings) Limited's CEO Compensation With the industry
Our data indicates that SH Group (Holdings) Limited has a market capitalization of HK$138m, and total annual CEO compensation was reported as HK$2.9m for the year to March 2020. Notably, that's an increase of 19% over the year before. We note that the salary portion, which stands at HK$2.09m constitutes the majority of total compensation received by 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 Man Ching Lau is paid more than the median for the industry. What's more, Man Ching Lau holds HK$18m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.
| Component | 2020 | 2019 | Proportion (2020) |
| Salary | HK$2.1m | HK$2.0m | 72% |
| Other | HK$801k | HK$433k | 28% |
| Total Compensation | HK$2.9m | HK$2.4m | 100% |
On an industry level, around 91% of total compensation represents salary and 8.8% is other remuneration. SH Group (Holdings) pays a modest slice of remuneration through salary, as compared to the broader industry. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.
SH Group (Holdings) Limited's Growth
Over the past three years, SH Group (Holdings) Limited has seen its earnings per share (EPS) grow by 30% per year. In the last year, its revenue is up 43%.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. Most shareholders would be pleased to see strong revenue growth combined with EPS growth. This combo suggests a fast growing business. 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 SH Group (Holdings) Limited Been A Good Investment?
Since shareholders would have lost about 50% over three years, some SH 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, SH Group (Holdings) pays its CEO higher than the norm for similar-sized companies belonging to the same industry. However, the EPS growth is certainly impressive, but it's disappointing to see negative shareholder returns over the same period. Although we'd stop short of calling it inappropriate, we think Man Ching is earning a very handsome sum.
While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. That's why we did some digging and identified 2 warning signs for SH Group (Holdings) that you should be aware of before investing.
Important note: SH 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:1637
SH Group (Holdings)
An investment holding company, provides electrical and mechanical (E&M) engineering services for public and private sectors in Hong Kong.
Mediocre balance sheet low.
