A Quick Analysis On Continental Holdings' (HKG:513) CEO Compensation

Shirley Cheng is the CEO of Continental Holdings Limited (HKG:513), and in this article, we analyze the executive's compensation package with respect to the overall performance of the company. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.

Check out our latest analysis for Continental Holdings

Comparing Continental Holdings Limited's CEO Compensation With the industry

Our data indicates that Continental Holdings Limited has a market capitalization of HK$444m, and total annual CEO compensation was reported as HK$2.6m for the year to June 2020. That is, the compensation was roughly the same as last year. In particular, the salary of HK$2.28m, 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$2.4m. This suggests that Continental Holdings remunerates its CEO largely in line with the industry average.

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 7.3% of the pie. Continental Holdings is largely mirroring the industry average when it comes to the share a salary enjoys in overall compensation. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

A Look at Continental Holdings Limited's Growth Numbers

Over the last three years, Continental Holdings Limited has shrunk its earnings per share by 46% per year. In the last year, its revenue is down 4.7%.

Overall this is not a very positive result for shareholders. 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 Continental Holdings Limited Been A Good Investment?

With a three year total loss of 60% for the shareholders, Continental Holdings Limited would certainly have some dissatisfied shareholders. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

As we touched on above, Continental Holdings Limited is currently paying a compensation that's close to the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. 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 CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. We've identified 2 warning signs for Continental Holdings that investors should be aware of in a dynamic business environment.

Switching gears from Continental Holdings, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.

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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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