Why Carrianna Group Holdings' (HKG:126) CEO Pay Matters

Pak Yan Leung has been the CEO of Carrianna Group Holdings Company Limited (HKG:126) since 2015, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also assess whether Carrianna Group Holdings pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

See our latest analysis for Carrianna Group Holdings

Comparing Carrianna Group Holdings Company Limited's CEO Compensation With the industry

At the time of writing, our data shows that Carrianna Group Holdings Company Limited has a market capitalization of HK$566m, and reported total annual CEO compensation of HK$3.1m for the year to March 2020. We note that's a decrease of 20% compared to last year. Notably, the salary which is HK$2.37m, represents most of the total compensation being paid.

On comparing similar-sized companies in the industry with market capitalizations below HK$1.6b, we found that the median total CEO compensation was HK$2.0m. This suggests that Pak Yan Leung is paid more than the median for the industry.

Talking in terms of the industry, salary represented approximately 87% of total compensation out of all the companies we analyzed, while other remuneration made up 13% of the pie. In Carrianna Group Holdings' case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

A Look at Carrianna Group Holdings Company Limited's Growth Numbers

Over the last three years, Carrianna Group Holdings Company Limited has shrunk its earnings per share by 52% per year. It achieved revenue growth of 6.3% over the last year.

Few shareholders would be pleased to read that EPS have declined. And the modest revenue growth over 12 months isn't much comfort against the reduced EPS. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Carrianna Group Holdings Company Limited Been A Good Investment?

Since shareholders would have lost about 47% over three years, some Carrianna Group Holdings Company Limited investors would surely be feeling negative emotions. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

To Conclude...

As we touched on above, Carrianna Group Holdings Company Limited is currently paying its CEO higher than the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. Disappointingly, share price gains over the last three years have failed to materialize. To make matters worse, EPS growth has also been negative during this period. Overall, with such poor performance, shareholder's would probably have questions if the company decided to give the CEO a raise.

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 6 warning signs for Carrianna Group Holdings you should be aware of, and 1 of them makes us a bit uncomfortable.

Important note: Carrianna Group 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. 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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