What We Learned About Simplicity Holding's (HKG:8367) CEO Compensation

Peony Wong is the CEO of Simplicity Holding Limited (HKG:8367), and in this article, we analyze the executive's compensation package with respect to the overall performance of the company. This analysis will also assess whether Simplicity Holding pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

View our latest analysis for Simplicity Holding

How Does Total Compensation For Peony Wong Compare With Other Companies In The Industry?

Our data indicates that Simplicity Holding Limited has a market capitalization of HK$90m, and total annual CEO compensation was reported as HK$479k for the year to March 2020. That's a fairly small increase of 4.8% over the previous year. Notably, the salary which is HK$424.0k, 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. That is to say, Peony Wong is paid under the industry median.

On an industry level, roughly 87% of total compensation represents salary and 13% is other remuneration. Although there is a difference in how total compensation is set, Simplicity Holding more or less reflects the market in terms of setting the salary. 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 Simplicity Holding Limited's Growth Numbers

Simplicity Holding Limited has reduced its earnings per share by 17% a year over the last three years. In the last year, its revenue is down 13%.

The decline in EPS is a bit concerning. This is compounded by the fact revenue is actually down on last year. These factors suggest that the business performance wouldn't really justify a high pay packet 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 Simplicity Holding Limited Been A Good Investment?

Since shareholders would have lost about 65% over three years, some Simplicity Holding Limited investors would surely be feeling negative emotions. So shareholders would probably want the company to be lessto generous with CEO compensation.

In Summary...

As we touched on above, Simplicity Holding Limited is currently paying its CEO below the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. Over the last three years, shareholder returns have been downright disappointing, and EPSgrowth has been equally disappointing. It's tough to say that Peony is earning a very high compensation, but shareholders will likely want to see healthier investor returns before agreeing that a raise is in order.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. We did our research and identified 4 warning signs (and 1 which makes us a bit uncomfortable) in Simplicity Holding we think you should know about.

Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.

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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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