This article will reflect on the compensation paid to Kwok Leung Kong who has served as CEO of Medicskin Holdings Limited (HKG:8307) since 2018. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.
View our latest analysis for Medicskin Holdings
Comparing Medicskin Holdings Limited's CEO Compensation With the industry
Our data indicates that Medicskin Holdings Limited has a market capitalization of HK$80m, and total annual CEO compensation was reported as HK$6.0m for the year to March 2020. Notably, that's a decrease of 16% over the year before. We note that the salary portion, which stands at HK$3.12m 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$2.0m. Hence, we can conclude that Kwok Leung Kong is remunerated higher than the industry median. What's more, Kwok Leung Kong holds HK$54m 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$3.1m | HK$3.2m | 52% |
| Other | HK$2.9m | HK$4.0m | 48% |
| Total Compensation | HK$6.0m | HK$7.2m | 100% |
Talking in terms of the industry, salary represented approximately 91% of total compensation out of all the companies we analyzed, while other remuneration made up 9.4% of the pie. It's interesting to note that Medicskin Holdings allocates a smaller portion of compensation to salary in comparison to the broader industry. 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 Medicskin Holdings Limited's Growth Numbers
Over the last three years, Medicskin Holdings Limited has shrunk its earnings per share by 72% per year. Its revenue is down 18% over the previous year.
The decline in EPS is a bit concerning. 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. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.
Has Medicskin Holdings Limited Been A Good Investment?
Since shareholders would have lost about 63% over three years, some Medicskin Holdings 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 noted earlier, Medicskin Holdings 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.
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 3 warning signs for Medicskin Holdings you should be aware of, and 1 of them makes us a bit uncomfortable.
Important note: Medicskin 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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About SEHK:8307
Medicskin Holdings
An investment holding company, provides medical skin care services in Hong Kong.
Mediocre balance sheet and slightly overvalued.
