Dennis Cheng has been the CEO of DCB Holdings Limited (HKG:8040) since 2017, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also assess whether DCB Holdings pays its CEO appropriately, considering recent earnings growth and total shareholder returns.
View our latest analysis for DCB Holdings
Comparing DCB Holdings Limited's CEO Compensation With the industry
Our data indicates that DCB Holdings Limited has a market capitalization of HK$29m, and total annual CEO compensation was reported as HK$3.4m for the year to March 2020. Notably, that's an increase of 60% over the year before. We think total compensation is more important but our data shows that the CEO salary is lower, at HK$1.7m.
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 DCB Holdings Limited pays Dennis Cheng north of the industry median.
| Component | 2020 | 2018 | Proportion (2020) |
| Salary | HK$1.7m | HK$1.2m | 49% |
| Other | HK$1.7m | HK$968k | 51% |
| Total Compensation | HK$3.4m | HK$2.1m | 100% |
On an industry level, roughly 91% of total compensation represents salary and 8.8% is other remuneration. DCB Holdings sets aside a smaller share of compensation for salary, in comparison to the overall industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.
DCB Holdings Limited's Growth
Over the last three years, DCB Holdings Limited has shrunk its earnings per share by 73% per year. It saw its revenue drop 21% over the last year.
Few shareholders would be pleased to read that EPS have declined. And the impression is worse when you consider revenue is down year-on-year. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. While we don't have analyst forecasts for the company, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.
Has DCB Holdings Limited Been A Good Investment?
With a three year total loss of 86% for the shareholders, DCB Holdings Limited would certainly have some dissatisfied shareholders. So shareholders would probably want the company to be lessto generous with CEO compensation.
To Conclude...
As we touched on above, DCB Holdings Limited is currently paying its CEO higher than the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. Disappointingly, share price gains over the last three years have failed to materialize. What's equally worrying is that the company isn't growing by our analysis. Considering such poor performance, we think shareholders might be concerned if the CEO's compensation were to grow.
It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. We identified 3 warning signs for DCB Holdings (2 are a bit 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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About SEHK:8040
Coolpoint Innonism Holding
An investment holding company, provides fitting-out, renovation, and Nano-AM application services in Hong Kong.
Mediocre balance sheet very low.
