What We Learned About Heng Tai Consumables Group's (HKG:197) CEO Compensation

Kwok Hing Lam became the CEO of Heng Tai Consumables Group Limited (HKG:197) in 2012, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. 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 Heng Tai Consumables Group

How Does Total Compensation For Kwok Hing Lam Compare With Other Companies In The Industry?

According to our data, Heng Tai Consumables Group Limited has a market capitalization of HK$131m, and paid its CEO total annual compensation worth HK$3.0m over the year to June 2020. That is, the compensation was roughly the same as last year. In particular, the salary of HK$2.96m, 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$1.4m. Hence, we can conclude that Kwok Hing Lam is remunerated higher than the industry median. Furthermore, Kwok Hing Lam directly owns HK$19m worth of shares in the company, implying that they are deeply invested in the company's success.

Speaking on an industry level, nearly 89% of total compensation represents salary, while the remainder of 11% is other remuneration. Heng Tai Consumables Group pays a high salary, concentrating more on this aspect of compensation in comparison to non-salary pay. 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.

Heng Tai Consumables Group Limited's Growth

Over the past three years, Heng Tai Consumables Group Limited has seen its earnings per share (EPS) grow by 19% per year. In the last year, its revenue is down 35%.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. While it would be good to see revenue growth, profits matter more in the end. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Heng Tai Consumables Group Limited Been A Good Investment?

Given the total shareholder loss of 89% over three years, many shareholders in Heng Tai Consumables Group Limited are probably rather dissatisfied, to say the least. So shareholders would probably want the company to be lessto generous with CEO compensation.

To Conclude...

Kwok Hing receives almost all of their compensation through a salary. As we noted earlier, Heng Tai Consumables Group pays its CEO higher than the norm for similar-sized companies belonging to the same industry. However, the EPS growth is certainly impressive, but it's disappointing to see negative shareholder returns over the same period. Considering overall performance, we can't say Kwok Hing is underpaid, in fact compensation is definitely on the higher side.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. In our study, we found 2 warning signs for Heng Tai Consumables Group you should be aware of, and 1 of them is concerning.

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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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