How Should Investors React To Satu Holdings' (HKG:8392) CEO Pay?

Leung Choi She is the CEO of Satu Holdings Limited (HKG:8392), 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.

See our latest analysis for Satu Holdings

Comparing Satu Holdings Limited's CEO Compensation With the industry

Our data indicates that Satu Holdings Limited has a market capitalization of HK$99m, and total annual CEO compensation was reported as HK$788k for the year to March 2020. We note that's an increase of 18% above last year. Notably, the salary which is HK$770.0k, represents most of the total compensation being paid.

For comparison, other companies in the industry with market capitalizations below HK$1.6b, reported a median total CEO compensation of HK$4.0m. Accordingly, Satu Holdings pays its CEO under the industry median. Moreover, Leung Choi She also holds HK$60m worth of Satu 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, around 77% of total compensation represents salary and 23% is other remuneration. Satu Holdings is focused on going down a more traditional approach and is paying a higher portion of compensation through salary, as compared to non-salary benefits. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.

A Look at Satu Holdings Limited's Growth Numbers

Over the last three years, Satu Holdings Limited has shrunk its earnings per share by 31% per year. Its revenue is down 13% over the previous year.

Few shareholders would be pleased to read that EPS have declined. 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. 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 Satu Holdings Limited Been A Good Investment?

Since shareholders would have lost about 73% over three years, some Satu Holdings Limited investors would surely be feeling negative emotions. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

To Conclude...

Satu Holdings pays its CEO a majority of compensation through a salary. As we noted earlier, Satu Holdings pays its CEO lower than the norm for similar-sized companies belonging to the same industry. Over the last three years, shareholder returns have been downright disappointing, and EPSgrowth has been equally disappointing. We can't say the CEO compensation is high, but shareholders will be cold to a bump at this stage, considering negative investor returns.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. We identified 3 warning signs for Satu Holdings (1 is significant!) that you should be aware of before investing here.

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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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