How Should Investors Feel About Alco Holdings' (HKG:328) CEO Remuneration?

The CEO of Alco Holdings Limited (HKG:328) is Wilson Leung, and this article examines the executive's compensation against the backdrop of overall company performance. This analysis will also assess whether Alco Holdings pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

See our latest analysis for Alco Holdings

Comparing Alco Holdings Limited's CEO Compensation With the industry

At the time of writing, our data shows that Alco Holdings Limited has a market capitalization of HK$174m, and reported total annual CEO compensation of HK$5.1m for the year to March 2020. That's mostly flat as compared to the prior year's compensation. In particular, the salary of HK$4.84m, makes up a huge portion of the total compensation being paid to the CEO.

In comparison with other companies in the industry with market capitalizations under HK$1.6b, the reported median total CEO compensation was HK$4.0m. This suggests that Alco Holdings remunerates its CEO largely in line with the industry average. Moreover, Wilson Leung also holds HK$16m worth of Alco Holdings stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

On an industry level, roughly 77% of total compensation represents salary and 23% is other remuneration. Investors will find it interesting that Alco 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.

A Look at Alco Holdings Limited's Growth Numbers

Alco Holdings Limited has reduced its earnings per share by 51% a year over the last three years. Its revenue is down 6.9% 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. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Alco Holdings Limited Been A Good Investment?

Since shareholders would have lost about 84% over three years, some Alco Holdings Limited investors would surely be feeling negative emotions. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

To Conclude...

Alco Holdings pays its CEO a majority of compensation through a salary. As we noted earlier, Alco Holdings pays its CEO in line with similar-sized companies belonging to the same industry. In the meantime, the company has reported declining EPS growth and shareholder returns over the last three years. Considering overall performance, shareholders will likely hold off support for a raise until results improve.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. That's why we did our research, and identified 3 warning signs for Alco Holdings (of which 2 are a bit concerning!) that you should know about in order to have a holistic understanding of the stock.

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.

When trading Alco Holdings or any other investment, use the platform considered by many to be the Professional's Gateway to the Worlds Market, Interactive Brokers. You get the lowest-cost* trading on stocks, options, futures, forex, bonds and funds worldwide from a single integrated account. Promoted

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.
^*Interactive Brokers Rated Lowest Cost Broker by StockBrokers.com Annual Online Review 2020

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.