In 2005 Chung Mon was appointed CEO of Perennial International Limited (HKG:725). First, this article will compare CEO compensation with compensation at similar sized companies. Next, we’ll consider growth that the business demonstrates. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This process should give us an idea about how appropriately the CEO is paid.
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How Does Chung Mon’s Compensation Compare With Similar Sized Companies?
Our data indicates that Perennial International Limited is worth HK$211m, and total annual CEO compensation is HK$5.4m. (This number is for the twelve months until December 2017). While this analysis focuses on total compensation, it’s worth noting the salary is lower, valued at HK$4.6m. We looked at a group of companies with market capitalizations under HK$1.6b, and the median CEO total compensation was HK$1.5m.
As you can see, Chung Mon is paid more than the median CEO pay at companies of a similar size, in the same market. However, this does not necessarily mean Perennial International Limited is paying too much. We can get a better idea of how generous the pay is by looking at the performance of the underlying business.
You can see, below, how CEO compensation at Perennial International has changed over time.
Is Perennial International Limited Growing?
On average over the last three years, Perennial International Limited has shrunk earnings per share by 19% each year (measured with a line of best fit). Its revenue is down -2.4% over last year.
Few shareholders would be pleased to read that earnings per share are lower over three years. 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, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.
Has Perennial International Limited Been A Good Investment?
With a three year total loss of 51%, Perennial International Limited would certainly have some dissatisfied shareholders. So shareholders would probably think the company shouldn’t be too generous with CEO compensation.
We compared total CEO remuneration at Perennial International Limited with the amount paid at companies with a similar market capitalization. Our data suggests that it pays above the median CEO pay within that group.Neither earnings per share nor revenue have been growing sufficiently fast to impress us, over the last three years.
Over the same period, investors would have come away with nothing in the way of share price gains. Some might well form the view that the CEO is paid too generously! CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling Perennial International (free visualization of insider trades).
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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If you spot an error that warrants correction, please contact the editor at email@example.com. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.