How Should Investors React To Wing Chi Holdings' (HKG:6080) CEO Pay?

This article will reflect on the compensation paid to Cheuk Kam Li who has served as CEO of Wing Chi Holdings Limited (HKG:6080) since 2017. This analysis will also assess whether Wing Chi Holdings pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

View our latest analysis for Wing Chi Holdings

Comparing Wing Chi Holdings Limited's CEO Compensation With the industry

Our data indicates that Wing Chi Holdings Limited has a market capitalization of HK$103m, and total annual CEO compensation was reported as HK$693k for the year to March 2020. We note that's an increase of 12% above last year. Notably, the salary which is HK$675.0k, represents most of the total compensation being paid.

In comparison with other companies in the industry with market capitalizations under HK$1.6b, the reported median total CEO compensation was HK$1.9m. This suggests that Cheuk Kam Li is paid below the industry median. What's more, Cheuk Kam Li holds HK$53m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

On an industry level, around 91% of total compensation represents salary and 8.7% is other remuneration. Wing Chi Holdings is focused on going down a more traditional approach and is paying a higher portion of compensation through salary, as compared to non-salary benefits. 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 Wing Chi Holdings Limited's Growth Numbers

Wing Chi Holdings Limited has reduced its earnings per share by 73% a year over the last three years. Its revenue is down 8.8% over the previous year.

The decline in EPS is a bit concerning. And the impression is worse when you consider revenue is down year-on-year. So given this relatively weak performance, shareholders would probably not want to see high compensation 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 Wing Chi Holdings Limited Been A Good Investment?

Given the total shareholder loss of 75% over three years, many shareholders in Wing Chi Holdings Limited are probably rather dissatisfied, to say the least. So shareholders would probably want the company to be lessto generous with CEO compensation.

In Summary...

Wing Chi Holdings pays its CEO a majority of compensation through a salary. As previously discussed, Cheuk Kam is compensated less than what is normal for CEOs of companies of similar size, and which belong to the same industry. EPS growth has failed to impress us, and the same can be said about shareholder returns. It's tough to say that Cheuk Kam is earning a very high compensation, but shareholders will likely want to see healthier investor returns before agreeing that a raise is in order.

CEO pay is simply one of the many factors that need to be considered while examining business performance. We identified 4 warning signs for Wing Chi Holdings (2 are concerning!) that you should be aware of before investing here.

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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