This article will reflect on the compensation paid to Charles Choi who has served as CEO of SG Group Holdings Limited (HKG:1657) since 2016. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.
See our latest analysis for SG Group Holdings
How Does Total Compensation For Charles Choi Compare With Other Companies In The Industry?
According to our data, SG Group Holdings Limited has a market capitalization of HK$87m, and paid its CEO total annual compensation worth HK$1.0m over the year to April 2020. This means that the compensation hasn't changed much from last year. In particular, the salary of HK$1.01m, makes up a huge portion of the total compensation being paid to the CEO.
For comparison, other companies in the industry with market capitalizations below HK$1.6b, reported a median total CEO compensation of HK$2.6m. This suggests that Charles Choi is paid below the industry median. What's more, Charles Choi holds HK$63m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.
| Component | 2020 | 2019 | Proportion (2020) |
| Salary | HK$1.0m | HK$1.0m | 98% |
| Other | HK$18k | HK$18k | 2% |
| Total Compensation | HK$1.0m | HK$1.0m | 100% |
Talking in terms of the industry, salary represented approximately 93% of total compensation out of all the companies we analyzed, while other remuneration made up 7.2% of the pie. Investors will find it interesting that SG Group Holdings pays the bulk of its rewards through a traditional salary, instead of non-salary benefits. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.
SG Group Holdings Limited's Growth
SG Group Holdings Limited has reduced its earnings per share by 42% a year over the last three years. Its revenue is down 35% over the previous year.
The decline in EPS is a bit concerning. And the fact that revenue is down year on year arguably paints an ugly picture. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. 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 SG Group Holdings Limited Been A Good Investment?
Since shareholders would have lost about 69% over three years, some SG Group Holdings Limited investors would surely be feeling negative emotions. Therefore, it might be upsetting for shareholders if the CEO were paid generously.
To Conclude...
Charles receives almost all of their compensation through a salary. As we noted earlier, SG Group Holdings pays its CEO lower than the norm for similar-sized companies belonging to the same industry. While we are quite underwhelmed with EPS growth, the shareholder returns over the past three years have also failed to impress us. It's tough to say that Charles is earning a very high compensation, but shareholders will likely want to see healthier investor returns before agreeing that a raise is in order.
While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. We did our research and spotted 4 warning signs for SG Group 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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About SEHK:1657
SG Group Holdings
An investment holding company, supplies apparel products with designing and sourcing services to fashion retailers.
Adequate balance sheet very low.
