This Is Why Ling Yui Holdings Limited's (HKG:784) CEO Compensation Looks Appropriate

The performance at Ling Yui Holdings Limited (HKG:784) has been rather lacklustre of late and shareholders may be wondering what CEO Siu Hung Chan is planning to do about this. One way they can exercise their influence on management is through voting on resolutions, such as executive remuneration at the next AGM, coming up on 26 August 2021. Voting on executive pay could be a powerful way to influence management, as studies have shown that the right compensation incentives impact company performance. In our opinion, CEO compensation does not look excessive and we discuss why.

View our latest analysis for Ling Yui Holdings

How Does Total Compensation For Siu Hung Chan Compare With Other Companies In The Industry?

At the time of writing, our data shows that Ling Yui Holdings Limited has a market capitalization of HK$117m, and reported total annual CEO compensation of HK$1.1m for the year to March 2021. This means that the compensation hasn't changed much from last year. Notably, the salary which is HK$967.0k, 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$1.7m. This suggests that Siu Hung Chan is paid below the industry median. What's more, Siu Hung Chan holds HK$8.3m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component	2021	2020	Proportion (2021)
Salary	HK$967k	HK$960k	85%
Other	HK$174k	HK$175k	15%
Total Compensation	HK$1.1m	HK$1.1m	100%

Speaking on an industry level, nearly 90% of total compensation represents salary, while the remainder of 10% is other remuneration. Ling Yui Holdings is largely mirroring the industry average when it comes to the share a salary enjoys in overall compensation. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

Ling Yui Holdings Limited's Growth

Ling Yui Holdings Limited has seen its earnings per share (EPS) increase by 8.5% a year over the past three years. In the last year, its revenue is down 47%.

We would argue that the lack of revenue growth in the last year is less than ideal, but it is good to see a modest EPS growth at least. In conclusion we can't form a strong opinion about business performance yet; but it's one worth watching. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Ling Yui Holdings Limited Been A Good Investment?

The return of -63% over three years would not have pleased Ling Yui Holdings Limited shareholders. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

The loss to shareholders over the past three years is certainly concerning. The lacklustre earnings growth perhaps may have something to do with the downward trend in the share price. In the upcoming AGM, shareholders will get the opportunity to discuss these concerns with the board and assess if the board's plan is likely to improve company performance.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. That's why we did our research, and identified 3 warning signs for Ling Yui Holdings (of which 1 is a bit unpleasant!) that you should know about in order to have a holistic understanding of the stock.

Important note: Ling Yui Holdings is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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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