Key Things To Understand About Chevalier International Holdings' (HKG:25) CEO Pay Cheque

This article will reflect on the compensation paid to Hoi Sang Kuok who has served as CEO of Chevalier International Holdings Limited (HKG:25) since 2007. 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 Chevalier International Holdings

Comparing Chevalier International Holdings Limited's CEO Compensation With the industry

At the time of writing, our data shows that Chevalier International Holdings Limited has a market capitalization of HK$2.9b, and reported total annual CEO compensation of HK$18m for the year to March 2020. We note that's an increase of 9.3% above last year. Notably, the salary which is HK$17.1m, represents most of the total compensation being paid.

On examining similar-sized companies in the industry with market capitalizations between HK$1.6b and HK$6.2b, we discovered that the median CEO total compensation of that group was HK$7.2m. This suggests that Hoi Sang Kuok is paid more than the median for the industry. Moreover, Hoi Sang Kuok also holds HK$1.6m worth of Chevalier International Holdings stock directly under their own name.

On an industry level, around 63% of total compensation represents salary and 37% is other remuneration. Investors will find it interesting that Chevalier International Holdings pays the bulk of its rewards through a traditional salary, instead of non-salary benefits. 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 Chevalier International Holdings Limited's Growth Numbers

Chevalier International Holdings Limited has reduced its earnings per share by 24% a year over the last three years. The trailing twelve months of revenue was pretty much the same as the prior period.

The decline in EPS is a bit concerning. And the flat revenue hardly impresses. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. 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 Chevalier International Holdings Limited Been A Good Investment?

With a three year total loss of 16% for the shareholders, Chevalier International Holdings Limited would certainly have some dissatisfied shareholders. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

To Conclude...

Chevalier International Holdings pays its CEO a majority of compensation through a salary. As we noted earlier, Chevalier International Holdings pays its CEO higher than the norm for similar-sized companies belonging to the same industry. Disappointingly, share price gains over the last three years have failed to materialize. 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 pay is simply one of the many factors that need to be considered while examining business performance. We did our research and identified 3 warning signs (and 1 which is a bit unpleasant) in Chevalier International Holdings we think you should know about.

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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