Here's What We Learned About The CEO Pay At Herald Holdings Limited (HKG:114)

Kam-Hung Shum has been the CEO of Herald Holdings Limited (HKG:114) since 2015, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also assess whether Herald Holdings pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

View our latest analysis for Herald Holdings

How Does Total Compensation For Kam-Hung Shum Compare With Other Companies In The Industry?

According to our data, Herald Holdings Limited has a market capitalization of HK$411m, and paid its CEO total annual compensation worth HK$3.2m over the year to March 2020. That's a notable increase of 14% on last year. We note that the salary portion, which stands at HK$2.54m constitutes the majority of total compensation received by the CEO.

For comparison, other companies in the industry with market capitalizations below HK$1.6b, reported a median total CEO compensation of HK$2.3m. This suggests that Kam-Hung Shum is paid more than the median for the industry.

On an industry level, roughly 68% of total compensation represents salary and 32% is other remuneration. Herald Holdings pays out 80% of remuneration in the form of a salary, significantly higher than the industry average. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

Herald Holdings Limited's Growth

Over the past three years, Herald Holdings Limited has seen its earnings per share (EPS) grow by 89% per year. In the last year, its revenue is down 4.7%.

This demonstrates that the company has been improving recently and is good news for the shareholders. The lack of revenue growth isn't ideal, but it is the bottom line that counts most in business. 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 Herald Holdings Limited Been A Good Investment?

With a three year total loss of 26% for the shareholders, Herald Holdings Limited would certainly have some dissatisfied shareholders. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

To Conclude...

As we touched on above, Herald 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. However, the EPS growth is certainly impressive, but shareholder returns — over the same period — have been disappointing. Considering overall performance, we can't say Kam-Hung is underpaid, in fact compensation is definitely on the higher side.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. We did our research and identified 4 warning signs (and 1 which is a bit unpleasant) in Herald Holdings we think you should know about.

Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.

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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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