Chi Hung Lee is the CEO of G & M Holdings Limited (HKG:6038), and in this article, we analyze the executive's compensation package with respect to the overall performance of the company. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for G & M Holdings.
See our latest analysis for G & M Holdings
Comparing G & M Holdings Limited's CEO Compensation With the industry
At the time of writing, our data shows that G & M Holdings Limited has a market capitalization of HK$146m, and reported total annual CEO compensation of HK$3.5m for the year to December 2019. Notably, that's a decrease of 8.3% over the year before. Notably, the salary which is HK$2.68m, represents most of the total compensation being paid.
For comparison, other companies in the industry with market capitalizations below HK$1.6b, reported a median total CEO compensation of HK$1.9m. Accordingly, our analysis reveals that G & M Holdings Limited pays Chi Hung Lee north of the industry median.
| Component | 2019 | 2018 | Proportion (2019) |
| Salary | HK$2.7m | HK$2.6m | 76% |
| Other | HK$861k | HK$1.3m | 24% |
| Total Compensation | HK$3.5m | HK$3.9m | 100% |
Talking in terms of the industry, salary represented approximately 91% of total compensation out of all the companies we analyzed, while other remuneration made up 8.8% of the pie. G & M Holdings sets aside a smaller share of compensation for salary, in comparison to the overall industry. 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 G & M Holdings Limited's Growth Numbers
Over the last three years, G & M Holdings Limited has shrunk its earnings per share by 27% per year. Its revenue is down 7.8% over the previous year.
Few shareholders would be pleased to read that EPS have declined. This is compounded by the fact revenue is actually down on last year. 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 G & M Holdings Limited Been A Good Investment?
Since shareholders would have lost about 47% over three years, some G & M 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, Chi Hung is compensated more than what is normal for CEOs of companies of similar size, and which belong to the same industry. This doesn't look good against shareholder returns, which have been negative for the past three years. What's equally worrying is that the company isn't growing by our analysis. Understandably, the company's shareholders might have some questions about the CEO's remuneration, given the disappointing performance.
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 G & M Holdings we think you should know about.
Switching gears from G & M 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. 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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About SEHK:6038
G & M Holdings
An investment holding company, provides design and build, and repair and maintenance services in relation to podium facade and curtain wall works in Hong Kong and the People’s Republic of China.
Flawless balance sheet with solid track record and pays a dividend.
