What Can We Conclude About Tak Lee Machinery Holdings' (HKG:2102) CEO Pay?

The CEO of Tak Lee Machinery Holdings Limited (HKG:2102) is Luen Fat Chow, and this article examines the executive's compensation against the backdrop of overall company performance. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.

Check out our latest analysis for Tak Lee Machinery Holdings

How Does Total Compensation For Luen Fat Chow Compare With Other Companies In The Industry?

Our data indicates that Tak Lee Machinery Holdings Limited has a market capitalization of HK$233m, 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.

For comparison, other companies in the industry with market capitalizations below HK$1.6b, reported a median total CEO compensation of HK$2.5m. This suggests that Luen Fat Chow is paid more than the median for the industry.

On an industry level, around 92% of total compensation represents salary and 7.7% is other remuneration. There isn't a significant difference between Tak Lee Machinery Holdings and the broader market, in terms of salary allocation in the overall compensation package. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

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. Its revenue is up 9.8% over the last year.

Shareholders would be glad to know that the company has improved itself over the last few years. It's also good to see modest revenue growth, suggesting the underlying business is healthy. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Tak Lee Machinery Holdings Limited Been A Good Investment?

Since shareholders would have lost about 30% over three years, some Tak Lee Machinery Holdings Limited investors would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

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. However, we must not forget that the EPS growth has been very strong, but we cannot say the same about the uninspiring shareholder returns (over the last three years). 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. That's why we did some digging and identified 3 warning signs for Tak Lee Machinery Holdings that investors should think about before committing capital to this stock.

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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