Why We Think Noble Engineering Group Holdings Limited's (HKG:8445) CEO Compensation Is Not Excessive At All

Simply Wall St
August 20, 2021
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Performance at Noble Engineering Group Holdings Limited (HKG:8445) has been rather uninspiring recently and shareholders may be wondering how CEO CK Tse plans to fix this. At the next AGM coming up on 27 August 2021, they can influence managerial decision making through voting on resolutions, including executive remuneration. It has been shown that setting appropriate executive remuneration incentivises the management to act in the interests of shareholders. We have prepared some analysis below to show that CEO compensation looks to be reasonable.

See our latest analysis for Noble Engineering Group Holdings

How Does Total Compensation For CK Tse Compare With Other Companies In The Industry?

Our data indicates that Noble Engineering Group Holdings Limited has a market capitalization of HK$96m, and total annual CEO compensation was reported as HK$600k for the year to March 2021. That's a notable decrease of 29% on last year. Notably, the salary of HK$600k is the entirety of the CEO compensation.

On comparing similar-sized companies in the industry with market capitalizations below HK$1.6b, we found that the median total CEO compensation was HK$1.7m. That is to say, CK Tse is paid under the industry median.

Component20212020Proportion (2021)
Salary HK$600k HK$840k 100%
Other - - -
Total CompensationHK$600k HK$840k100%

On an industry level, roughly 90% of total compensation represents salary and 10% is other remuneration. At the company level, Noble Engineering Group Holdings pays CK Tse solely through a salary, preferring to go down a conventional route. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

SEHK:8445 CEO Compensation August 20th 2021

Noble Engineering Group Holdings Limited's Growth

Over the last three years, Noble Engineering Group Holdings Limited has shrunk its earnings per share by 105% per year. In the last year, its revenue is up 38%.

Investors would be a bit wary of companies that have lower EPS But on the other hand, revenue growth is strong, suggesting a brighter future. These two metrics are moving in different directions, so while it's hard to be confident judging performance, we think the stock is worth watching. We don't have analyst forecasts, but you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.

Has Noble Engineering Group Holdings Limited Been A Good Investment?

With a total shareholder return of -89% over three years, Noble Engineering Group Holdings Limited shareholders would by and large be disappointed. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

In Summary...

Noble Engineering Group Holdings rewards its CEO solely through a salary, ignoring non-salary benefits completely. The fact that shareholders have earned a negative share price return is certainly disconcerting. The fact that earnings growth has gone backwards could be a factor for the downward trend in the share price. The upcoming AGM will provide shareholders the opportunity to raise their concerns and evaluate if the board’s judgement and decision-making is aligned with their expectations.

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

Switching gears from Noble Engineering Group 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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