Is YGM Trading Limited (HKG:375) Overpaying Its CEO?

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William Fu became the CEO of YGM Trading Limited (HKG:375) in 2015. This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. Next, we’ll consider growth that the business demonstrates. And finally – as a second measure of performance – we will look at the returns shareholders have received over the last few years. The aim of all this is to consider the appropriateness of CEO pay levels.

Check out our latest analysis for YGM Trading

How Does William Fu’s Compensation Compare With Similar Sized Companies?

According to our data, YGM Trading Limited has a market capitalization of HK$1.2b, and pays its CEO total annual compensation worth HK$7.3m. (This figure is for the year to March 2018). We think total compensation is more important but we note that the CEO salary is lower, at HK$2.1m. As part of our analysis we looked at companies in the same jurisdiction, with market capitalizations of HK$785m to HK$3.1b. The median total CEO compensation was HK$1.7m.

Thus we can conclude that William Fu receives more in total compensation than the median of a group of companies in the same market, and of similar size to YGM Trading Limited. However, this doesn’t necessarily mean the pay is too high. We can get a better idea of how generous the pay is by looking at the performance of the underlying business.

The graphic below shows how CEO compensation at YGM Trading has changed from year to year.

SEHK:375 CEO Compensation, May 2nd 2019
SEHK:375 CEO Compensation, May 2nd 2019

Is YGM Trading Limited Growing?

Over the last three years YGM Trading Limited has grown its earnings per share (EPS) by an average of 77% per year (using a line of best fit). In the last year, its revenue is down -41%.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. Revenue growth is a real positive for growth, but ultimately profits are more important. Although we don’t have analyst forecasts, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.

Has YGM Trading Limited Been A Good Investment?

Boasting a total shareholder return of 181% over three years, YGM Trading Limited has done well by shareholders. 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.

In Summary…

We compared the total CEO remuneration paid by YGM Trading Limited, and compared it to remuneration at a group of similar sized companies. Our data suggests that it pays above the median CEO pay within that group.

However, the earnings per share growth over three years is certainly impressive. Even better, returns to shareholders have been plentiful, over the same time period. As a result of this good performance, the CEO remuneration may well be quite reasonable. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling YGM Trading (free visualization of insider trades).

If you want to buy a stock that is better than YGM Trading, this free list of high return, low debt companies is a great place to look.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.