Does Ajisen (China) Holdings' (HKG:538) CEO Salary Compare Well With The Performance Of The Company?

The CEO of Ajisen (China) Holdings Limited (HKG:538) is Wai Poon, and this article examines the executive's compensation against the backdrop of overall company performance. This analysis will also assess whether Ajisen (China) Holdings pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

View our latest analysis for Ajisen (China) Holdings

How Does Total Compensation For Wai Poon Compare With Other Companies In The Industry?

Our data indicates that Ajisen (China) Holdings Limited has a market capitalization of HK$1.2b, and total annual CEO compensation was reported as CN¥2.0m for the year to December 2019. That's just a smallish increase of 3.3% on last year. In particular, the salary of CN¥1.80m, makes up a huge portion of the total compensation being paid to the CEO.

For comparison, other companies in the same industry with market capitalizations ranging between HK$775m and HK$3.1b had a median total CEO compensation of CN¥2.0m. So it looks like Ajisen (China) Holdings compensates Wai Poon in line with the median for the industry. What's more, Wai Poon holds HK$43m 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, around 87% of total compensation represents salary and 13% is other remuneration. There isn't a significant difference between Ajisen (China) Holdings and the broader market, in terms of salary allocation in the overall compensation package. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

Ajisen (China) Holdings Limited's Growth

Ajisen (China) Holdings Limited has seen its earnings per share (EPS) increase by 50% a year over the past three years. Its revenue is down 17% over the previous year.

This demonstrates that the company has been improving recently and is good news for the shareholders. The lack of revenue growth isn't ideal, but it is the bottom line that counts most in business. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Ajisen (China) Holdings Limited Been A Good Investment?

Since shareholders would have lost about 66% over three years, some Ajisen (China) Holdings Limited investors would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

As we touched on above, Ajisen (China) Holdings Limited is currently paying a compensation that's close to the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. On the other hand, the company has logged negative shareholder returns over the previous three years. But EPS growth is moving in a favorable direction, certainly a positive sign. It's tough for us to say CEO compensation is too generous when EPS growth is positive, but negative investor returns will irk shareholders and reduce any chances of a raise.

CEO pay is simply one of the many factors that need to be considered while examining business performance. That's why we did our research, and identified 2 warning signs for Ajisen (China) Holdings (of which 1 shouldn't be ignored!) that you should know about in order to have a holistic understanding of the stock.

Important note: Ajisen (China) 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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