Stephen Chu became the CEO of Capital Estate Limited (HKG:193) in 2009, 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 look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Capital Estate.
View our latest analysis for Capital Estate
Comparing Capital Estate Limited's CEO Compensation With the industry
According to our data, Capital Estate Limited has a market capitalization of HK$78m, and paid its CEO total annual compensation worth HK$2.6m over the year to July 2020. That's mostly flat as compared to the prior year's compensation. Notably, the salary which is HK$2.62m, represents most of the total compensation being paid.
In comparison with other companies in the industry with market capitalizations under HK$1.6b, the reported median total CEO compensation was HK$1.9m. This suggests that Stephen Chu is paid more than the median for the industry. What's more, Stephen Chu holds HK$11m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.
| Component | 2020 | 2019 | Proportion (2020) |
| Salary | HK$2.6m | HK$2.6m | 99% |
| Other | HK$18k | HK$18k | 1% |
| Total Compensation | HK$2.6m | HK$2.6m | 100% |
On an industry level, roughly 87% of total compensation represents salary and 13% is other remuneration. Capital Estate pays a high salary, concentrating more on this aspect of compensation in comparison to non-salary pay. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.
Capital Estate Limited's Growth
Capital Estate Limited has reduced its earnings per share by 19% a year over the last three years. Its revenue is down 77% 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 Capital Estate Limited Been A Good Investment?
With a three year total loss of 72% for the shareholders, Capital Estate Limited would certainly have some dissatisfied shareholders. Therefore, it might be upsetting for shareholders if the CEO were paid generously.
To Conclude...
Capital Estate pays its CEO a majority of compensation through a salary. As we noted earlier, Capital Estate pays its CEO higher than the norm for similar-sized companies belonging to the same industry. 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. Understandably, the company's shareholders might have some questions about the CEO's remuneration, given the disappointing performance.
While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. That's why we did some digging and identified 1 warning sign for Capital Estate that you should be aware of before investing.
Switching gears from Capital Estate, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.
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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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About SEHK:193
Capital Estate
An investment holding company, engages in the property investment and development, consumer finance, hotel operation, and financial investment activities in Mainland China and Hong Kong.
Flawless balance sheet low.
