The CEO of Fulum Group Holdings Limited (HKG:1443) is Wai Yeung, and this article examines 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.
How Does Total Compensation For Wai Yeung Compare With Other Companies In The Industry?
Our data indicates that Fulum Group Holdings Limited has a market capitalization of HK$235m, and total annual CEO compensation was reported as HK$1.1m for the year to March 2020. Notably, that's a decrease of 24% over the year before. We note that the salary portion, which stands at HK$1.10m constitutes the majority of total compensation received by the CEO.
For comparison, other companies in the industry with market capitalizations below HK$1.6b, reported a median total CEO compensation of HK$1.9m. In other words, Fulum Group Holdings pays its CEO lower than the industry median. What's more, Wai Yeung holds HK$79m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.
On an industry level, roughly 87% of total compensation represents salary and 13% is other remuneration. Investors will find it interesting that Fulum Group Holdings pays the bulk of its rewards through a traditional salary, instead of 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 Fulum Group Holdings Limited's Growth Numbers
Over the last three years, Fulum Group Holdings Limited has shrunk its earnings per share by 129% per year. Its revenue is down 45% over the previous year.
Overall this is not a very positive result for shareholders. This is compounded by the fact revenue is actually down on last year. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. 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 Fulum Group Holdings Limited Been A Good Investment?
Given the total shareholder loss of 79% over three years, many shareholders in Fulum Group Holdings Limited are probably rather dissatisfied, to say the least. This suggests it would be unwise for the company to pay the CEO too generously.
Fulum Group Holdings pays its CEO a majority of compensation through a salary. As previously discussed, Wai is compensated less than what is normal for CEOs of companies of similar size, and which belong to the same industry. EPS growth has failed to impress us, and the same can be said about shareholder returns. It's tough to say that Wai is earning a very high compensation, but shareholders will likely want to see healthier investor returns before agreeing that a raise is in order.
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 did our research and identified 2 warning signs (and 1 which is potentially serious) in Fulum Group Holdings we think you should know about.
Important note: Fulum 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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