The CEO of SH Group (Holdings) Limited (HKG:1637) is Man Ching Lau, and this article examines the executive's compensation against the backdrop of overall company performance. 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
According to our data, SH Group (Holdings) Limited has a market capitalization of HK$142m, and paid its CEO total annual compensation worth HK$2.9m over the year to March 2020. That's a notable increase of 19% on last year. In particular, the salary of HK$2.09m, makes up a huge portion of the total compensation being paid to the CEO.
For comparison, other companies in the industry with market capitalizations below HK$1.6b, reported a median total CEO compensation of HK$1.9m. This suggests that Man Ching Lau is paid more than the median for the industry. Furthermore, Man Ching Lau directly owns HK$21m worth of shares in the company, implying that they are deeply invested in the company's success.
| Component | 2020 | 2019 | Proportion (2020) |
| Salary | HK$2.1m | HK$2.0m | 72% |
| Other | HK$801k | HK$433k | 28% |
| Total Compensation | HK$2.9m | HK$2.4m | 100% |
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 8.8% of the pie. It's interesting to note that SH Group (Holdings) allocates a smaller portion of compensation to salary in comparison 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.
A Look at SH Group (Holdings) Limited's Growth Numbers
Over the last three years, SH Group (Holdings) Limited has shrunk its earnings per share by 6.7% per year. It achieved revenue growth of 8.3% over the last year.
The decline in EPS is a bit concerning. The modest increase in revenue in the last year isn't enough to make us overlook the disappointing change in EPS. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. We don't have analyst forecasts, but you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.
Has SH Group (Holdings) Limited Been A Good Investment?
Since shareholders would have lost about 42% over three years, some SH Group (Holdings) Limited investors would surely be feeling negative emotions. So shareholders would probably want the company to be lessto generous with CEO compensation.
In Summary...
As we noted earlier, SH Group (Holdings) pays its CEO higher than the norm for similar-sized companies belonging to the same industry. This doesn't look good against shareholder returns, which have been negative for the past three years. To make matters worse, EPS growth has also been negative during this period. Considering such poor performance, we think shareholders might be concerned if the CEO's compensation were to grow.
CEO compensation can have a massive impact on performance, but it's just one element. That's why we did some digging and identified 2 warning signs for SH Group (Holdings) that investors should think about before committing capital to this stock.
Switching gears from SH Group (Holdings), if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.
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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.
Good value with adequate balance sheet.
