A Quick Analysis On Hang Chi Holdings' (HKG:8405) CEO Compensation

This article will reflect on the compensation paid to Chi Tat Lui who has served as CEO of Hang Chi Holdings Limited (HKG:8405) since 2018. This analysis will also assess whether Hang Chi Holdings pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

Check out our latest analysis for Hang Chi Holdings

How Does Total Compensation For Chi Tat Lui Compare With Other Companies In The Industry?

Our data indicates that Hang Chi Holdings Limited has a market capitalization of HK$372m, and total annual CEO compensation was reported as HK$883k for the year to December 2019. That's a fairly small increase of 7.7% over the previous year. Notably, the salary which is HK$681.0k, represents most of the total compensation being paid.

For comparison, other companies in the industry with market capitalizations below HK$1.6b, reported a median total CEO compensation of HK$2.0m. Accordingly, Hang Chi Holdings pays its CEO under the industry median. What's more, Chi Tat Lui holds HK$34m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Speaking on an industry level, nearly 91% of total compensation represents salary, while the remainder of 9.4% is other remuneration. It's interesting to note that Hang Chi 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.

Hang Chi Holdings Limited's Growth

Hang Chi Holdings Limited's earnings per share (EPS) grew 64% per year over the last three years. In the last year, its revenue is up 36%.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. Most shareholders would be pleased to see strong revenue growth combined with EPS growth. This combo suggests a fast growing business. 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 Hang Chi Holdings Limited Been A Good Investment?

With a total shareholder return of 23% over three years, Hang Chi Holdings Limited shareholders would, in general, be reasonably content. But they probably don't want to see the CEO paid more than is normal for companies around the same size.

In Summary...

As previously discussed, Chi Tat is compensated less than what is normal for CEOs of companies of similar size, and which belong to the same industry. Meanwhile, EPS growth has been rock solid for the past three years. However, shareholder returns have failed to show the same level of growth. We would wish for better returns (whether dividends or capital gains) but we do admire the solidEPS growth on show here. So it's fair to say Chi Tat has done quite well despite modest compensation and shareholders might not be averse to a raise.

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 2 warning signs for Hang Chi Holdings that investors should think about before committing capital to this stock.

Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies that have HIGH return on equity 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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