Kit Chung Ting became the CEO of Texwinca Holdings Limited (HKG:321) in 2013, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. 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 Texwinca Holdings
How Does Total Compensation For Kit Chung Ting Compare With Other Companies In The Industry?
According to our data, Texwinca Holdings Limited has a market capitalization of HK$2.3b, and paid its CEO total annual compensation worth HK$14m over the year to March 2020. We note that's a decrease of 10% compared to last year. In particular, the salary of HK$7.52m, makes up a huge portion of the total compensation being paid to the CEO.
On examining similar-sized companies in the industry with market capitalizations between HK$775m and HK$3.1b, we discovered that the median CEO total compensation of that group was HK$3.1m. Accordingly, our analysis reveals that Texwinca Holdings Limited pays Kit Chung Ting north of the industry median. What's more, Kit Chung Ting holds HK$10m 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$7.5m | HK$8.0m | 53% |
| Other | HK$6.6m | HK$7.7m | 47% |
| Total Compensation | HK$14m | HK$16m | 100% |
On an industry level, around 93% of total compensation represents salary and 7.3% is other remuneration. It's interesting to note that Texwinca Holdings allocates a smaller portion of compensation to salary in comparison to the broader industry. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.
A Look at Texwinca Holdings Limited's Growth Numbers
Over the last three years, Texwinca Holdings Limited has shrunk its earnings per share by 32% per year. In the last year, its revenue is down 15%.
The decline in EPS is a bit concerning. This is compounded by the fact revenue is actually down on last year. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.
Has Texwinca Holdings Limited Been A Good Investment?
With a three year total loss of 49% for the shareholders, Texwinca 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, Texwinca 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. Overall, with such poor performance, shareholder's would probably have questions if the company decided to give the CEO a raise.
CEO compensation can have a massive impact on performance, but it's just one element. That's why we did some digging and identified 3 warning signs for Texwinca Holdings that investors should think about before committing capital to this stock.
Important note: Texwinca Holdings is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.
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About SEHK:321
Texwinca Holdings
Engages in the production, dyeing, and sale of knitted fabrics, yarns, and garments in Hong Kong, the United States, Mainland China, Japan, and internationally.
Proven track record with mediocre balance sheet.
