Does Central Development Holdings' (HKG:475) CEO Salary Compare Well With Industry Peers?

The CEO of Central Development Holdings Limited (HKG:475) is Hubert Chan, and this article examines the executive's compensation against the backdrop of overall company performance. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Central Development Holdings.

See our latest analysis for Central Development Holdings

How Does Total Compensation For Hubert Chan Compare With Other Companies In The Industry?

Our data indicates that Central Development Holdings Limited has a market capitalization of HK$324m, and total annual CEO compensation was reported as HK$2.3m for the year to March 2020. That's a notable decrease of 30% on last year. In particular, the salary of HK$1.95m, 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$2.4m. This suggests that Central Development Holdings remunerates its CEO largely in line with the industry average. What's more, Hubert Chan holds HK$2.8m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

On an industry level, roughly 93% of total compensation represents salary and 7.4% is other remuneration. Although there is a difference in how total compensation is set, Central Development Holdings more or less reflects the market in terms of setting the salary. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

Central Development Holdings Limited's Growth

Over the last three years, Central Development Holdings Limited has shrunk its earnings per share by 8.0% per year. Its revenue is down 67% over the previous year.

Overall this is not a very positive result for shareholders. 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. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Central Development Holdings Limited Been A Good Investment?

With a three year total loss of 32% for the shareholders, Central Development Holdings Limited would certainly have some dissatisfied shareholders. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

In Summary...

As we noted earlier, Central Development 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. We'd stop short of saying compensation is inappropriate, but we would understand if shareholders had questions regarding a future raise.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. That's why we did some digging and identified 3 warning signs for Central Development Holdings that investors should think about before committing capital to this stock.

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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