This Is The Reason Why We Think Smart Globe Holdings Limited's (HKG:1481) CEO Might Be Underpaid

The solid performance at Smart Globe Holdings Limited (HKG:1481) has been impressive and shareholders will probably be pleased to know that CEO Derek Lam has delivered. At the upcoming AGM on 07 May 2021, they will get a chance to hear the board review the company results, discuss future strategy and cast their vote on any resolutions such as executive remuneration. We think the CEO has done a pretty decent job and probably deserves a well-earned pay rise.

See our latest analysis for Smart Globe Holdings

How Does Total Compensation For Derek Lam Compare With Other Companies In The Industry?

According to our data, Smart Globe Holdings Limited has a market capitalization of HK$221m, and paid its CEO total annual compensation worth HK$454k over the year to December 2020. That's a modest increase of 6.1% on the prior year. Notably, the salary which is HK$282.0k, represents most of the total compensation being paid.

For comparison, other companies in the industry with market capitalizations below HK$1.6b, reported a median total CEO compensation of HK$1.5m. That is to say, Derek Lam is paid under the industry median.

Component	2020	2019	Proportion (2020)
Salary	HK$282k	HK$258k	62%
Other	HK$172k	HK$170k	38%
Total Compensation	HK$454k	HK$428k	100%

On an industry level, roughly 90% of total compensation represents salary and 10% is other remuneration. In Smart Globe Holdings' case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.

A Look at Smart Globe Holdings Limited's Growth Numbers

Smart Globe Holdings Limited has seen its earnings per share (EPS) increase by 45% a year over the past three years. Its revenue is down 3.7% over the previous year.

Shareholders would be glad to know that the company has improved itself over the last few years. The lack of revenue growth isn't ideal, but it is the bottom line that counts most in business. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Smart Globe Holdings Limited Been A Good Investment?

Most shareholders would probably be pleased with Smart Globe Holdings Limited for providing a total return of 82% over three years. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.

To Conclude...

Seeing that the company has put in a relatively good performance, the CEO remuneration policy may not be the focus at the AGM. However, investors will get the chance to engage on key strategic initiatives and future growth opportunities for the company and set their longer-term expectations.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. We did our research and spotted 3 warning signs for Smart Globe Holdings that investors should look into moving forward.

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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