Here's Why We Think Affluent Foundation Holdings Limited's (HKG:1757) CEO Compensation Looks Fair for the time being

Performance at Affluent Foundation Holdings Limited (HKG:1757) has been reasonably good and CEO Siu Cheong Chan has done a decent job of steering the company in the right direction. In light of this performance, CEO compensation will probably not be the main focus for shareholders as they go into the AGM on 18 August 2021. Here is our take on why we think the CEO compensation looks appropriate.

See our latest analysis for Affluent Foundation Holdings

How Does Total Compensation For Siu Cheong Chan Compare With Other Companies In The Industry?

According to our data, Affluent Foundation Holdings Limited has a market capitalization of HK$492m, and paid its CEO total annual compensation worth HK$1.3m over the year to March 2021. This means that the compensation hasn't changed much from last year. While we always look at total compensation first, our analysis shows that the salary component is less, at HK$47k.

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$1.8m. From this we gather that Siu Cheong Chan is paid around the median for CEOs in the industry. What's more, Siu Cheong Chan holds HK$369m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component	2021	2020	Proportion (2021)
Salary	HK$47k	HK$58k	3%
Other	HK$1.3m	HK$1.3m	97%
Total Compensation	HK$1.3m	HK$1.4m	100%

On an industry level, roughly 90% of total compensation represents salary and 10% is other remuneration. Interestingly, the company has chosen to go down an unconventional route in that it pays a smaller salary to Siu Cheong Chan as compared to non-salary compensation over the one-year period examined. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

A Look at Affluent Foundation Holdings Limited's Growth Numbers

Over the last three years, Affluent Foundation Holdings Limited has shrunk its earnings per share by 69% per year. It achieved revenue growth of 110% over the last year.

The reduction in EPS, over three years, is arguably concerning. But in contrast the revenue growth is strong, suggesting future potential for EPS growth. In conclusion we can't form a strong opinion about business performance yet; but it's one worth watching. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Affluent Foundation Holdings Limited Been A Good Investment?

With a total shareholder return of 14% over three years, Affluent Foundation Holdings Limited shareholders would, in general, be reasonably content. But they probably don't want to see the CEO paid more than is normal for companies around the same size.

To Conclude...

Affluent Foundation Holdings primarily uses non-salary benefits to reward its CEO. Some shareholders will be pleased by the relatively good results, however, the results could still be improved. We reckon that there are some shareholders who may be hesitant to increase CEO pay further until EPS growth starts to improve, despite the robust revenue growth.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. We did our research and spotted 4 warning signs for Affluent Foundation Holdings that investors should look into moving forward.

Switching gears from Affluent Foundation 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. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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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