Luen Fat Chow is the CEO of Tak Lee Machinery Holdings Limited (HKG:2102), and in this article, we analyze the executive's compensation package with respect to the overall performance of the company. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.
Comparing Tak Lee Machinery Holdings Limited's CEO Compensation With the industry
Our data indicates that Tak Lee Machinery Holdings Limited has a market capitalization of HK$248m, and total annual CEO compensation was reported as HK$5.9m for the year to July 2020. That's a notable increase of 96% on last year. We note that the salary portion, which stands at HK$5.39m 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$2.3m. Accordingly, our analysis reveals that Tak Lee Machinery Holdings Limited pays Luen Fat Chow north of the industry median.
Speaking on an industry level, nearly 92% of total compensation represents salary, while the remainder of 7.6% is other remuneration. Our data reveals that Tak Lee Machinery Holdings allocates salary more or less in line with the wider market. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.
A Look at Tak Lee Machinery Holdings Limited's Growth Numbers
Tak Lee Machinery Holdings Limited's earnings per share (EPS) grew 47% per year over the last three years. In the last year, its revenue is up 9.8%.
This demonstrates that the company has been improving recently and is good news for the shareholders. It's nice to see revenue heading northwards, as this is consistent with healthy business conditions. 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 Tak Lee Machinery Holdings Limited Been A Good Investment?
With a three year total loss of 24% for the shareholders, Tak Lee Machinery Holdings Limited would certainly have some dissatisfied shareholders. So shareholders would probably want the company to be lessto generous with CEO compensation.
As previously discussed, Luen Fat is compensated more than what is normal for CEOs of companies of similar size, and which belong to the same industry. But the company has impressed with its EPS growth, but shareholder returns — over the same period — have been disappointing. Although we'd stop short of calling it inappropriate, we think Luen Fat is earning a very handsome sum.
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 2 warning signs for Tak Lee Machinery Holdings that investors should look into moving forward.
Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies that have HIGH return on equity 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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