It Looks Like Ching Lee Holdings Limited's (HKG:3728) CEO May Expect Their Salary To Be Put Under The Microscope

By
Simply Wall St
Published
August 20, 2021
SEHK:3728
Source: Shutterstock

Ching Lee Holdings Limited (HKG:3728) has not performed well recently and CEO Choi Wah Ng will probably need to up their game. Shareholders will be interested in what the board will have to say about turning performance around at the next AGM on 27 August 2021. This will be also be a chance where they can challenge the board on company direction and vote on resolutions such as executive remuneration. We present the case why we think CEO compensation is out of sync with company performance.

View our latest analysis for Ching Lee Holdings

Comparing Ching Lee Holdings Limited's CEO Compensation With the industry

At the time of writing, our data shows that Ching Lee Holdings Limited has a market capitalization of HK$186m, and reported total annual CEO compensation of HK$10.0m for the year to March 2021. That's mostly flat as compared to the prior year's compensation. We think total compensation is more important but our data shows that the CEO salary is lower, at HK$2.8m.

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$1.7m. This suggests that Choi Wah Ng is paid more than the median for the industry. Furthermore, Choi Wah Ng directly owns HK$130m worth of shares in the company, implying that they are deeply invested in the company's success.

Component20212020Proportion (2021)
Salary HK$2.8m HK$3.3m 28%
Other HK$7.2m HK$6.6m 72%
Total CompensationHK$10.0m HK$10.0m100%

Speaking on an industry level, nearly 90% of total compensation represents salary, while the remainder of 10% is other remuneration. In Ching Lee Holdings' case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

ceo-compensation
SEHK:3728 CEO Compensation August 20th 2021

A Look at Ching Lee Holdings Limited's Growth Numbers

Over the last three years, Ching Lee Holdings Limited has shrunk its earnings per share by 17% per year. Its revenue is down 8.5% over the previous year.

Overall this is not a very positive result for shareholders. And the fact that revenue is down year on year arguably paints an ugly picture. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Ching Lee Holdings Limited Been A Good Investment?

The return of -33% over three years would not have pleased Ching Lee Holdings Limited shareholders. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

Not only have shareholders not seen a favorable return on their investment, but the business hasn't performed well either. Few shareholders would be willing to award the CEO with a pay raise. At the upcoming AGM, the board will get the chance to explain the steps it plans to take to improve business performance.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. That's why we did our research, and identified 5 warning signs for Ching Lee Holdings (of which 2 shouldn't be ignored!) that you should know about in order to have a holistic understanding of the 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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