Hong Kong Food Investment Holdings Limited (HKG:60) has not performed well recently and CEO Ellis Man will probably need to up their game. Shareholders can take the chance to hold the board and management accountable for the unsatisfactory performance at the next AGM on 31 August 2021. It would also be an opportunity for shareholders to influence management through voting on company resolutions such as executive remuneration, which could impact the firm significantly. The data we present below explains why we think CEO compensation is not consistent with recent performance.
Comparing Hong Kong Food Investment Holdings Limited's CEO Compensation With the industry
At the time of writing, our data shows that Hong Kong Food Investment Holdings Limited has a market capitalization of HK$161m, and reported total annual CEO compensation of HK$1.4m for the year to March 2021. This means that the compensation hasn't changed much from last year. In particular, the salary of HK$1.34m, 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$1.3m. From this we gather that Ellis Man is paid around the median for CEOs in the industry.
On an industry level, around 88% of total compensation represents salary and 12% is other remuneration. Hong Kong Food Investment Holdings has gone down a largely traditional route, paying Ellis Man a high salary, giving it preference over non-salary benefits. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.
Hong Kong Food Investment Holdings Limited's Growth
Over the last three years, Hong Kong Food Investment Holdings Limited has shrunk its earnings per share by 94% per year. In the last year, its revenue is down 6.4%.
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. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. While we don't have analyst forecasts for the company, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.
Has Hong Kong Food Investment Holdings Limited Been A Good Investment?
Few Hong Kong Food Investment Holdings Limited shareholders would feel satisfied with the return of -34% over three years. This suggests it would be unwise for the company to pay the CEO too generously.
Ellis receives almost all of their compensation through a salary. Not only have shareholders not seen a favorable return on their investment, but the business hasn't performed well either. Few shareholders would be willing to award the CEO with a pay raise. At the upcoming AGM, management will get a chance to explain how they plan to get the business back on track and address the concerns from investors.
CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. We identified 3 warning signs for Hong Kong Food Investment Holdings (1 is a bit concerning!) that you should be aware of before investing here.
Important note: Hong Kong Food Investment Holdings is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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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