Here's Why We Think Hang Chi Holdings Limited's (HKG:8405) CEO Compensation Looks Fair for the time being

Under the guidance of CEO Chi Tat Lui, Hang Chi Holdings Limited (HKG:8405) has performed reasonably well recently. As shareholders go into the upcoming AGM on 06 May 2021, CEO compensation will probably not be their focus, but rather the steps management will take to continue the growth momentum. Here is our take on why we think the CEO compensation looks appropriate.

View our latest analysis for Hang Chi Holdings

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

At the time of writing, our data shows that Hang Chi Holdings Limited has a market capitalization of HK$392m, and reported total annual CEO compensation of HK$1.4m for the year to December 2020. Notably, that's an increase of 58% over the year before. In particular, the salary of HK$1.18m, makes up a huge portion of the total compensation being paid to the CEO.

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 Hang Chi Holdings remunerates its CEO largely in line with the industry average. Furthermore, Chi Tat Lui directly owns HK$37m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2020	2019	Proportion (2020)
Salary	HK$1.2m	HK$681k	84%
Other	HK$224k	HK$202k	16%
Total Compensation	HK$1.4m	HK$883k	100%

On an industry level, roughly 90% of total compensation represents salary and 10% is other remuneration. Our data reveals that Hang Chi Holdings allocates salary more or less in line with the wider market. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

Hang Chi Holdings Limited's Growth

Over the past three years, Hang Chi Holdings Limited has seen its earnings per share (EPS) grow by 200% per year. It achieved revenue growth of 31% over the last year.

Shareholders would be glad to know that the company has improved itself over the last few years. The combination of strong revenue growth with medium-term EPS improvement certainly points to the kind of growth we like to see. 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 26% 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...

Seeing that the company has put up a decent performance, only a few shareholders, if any at all, might have questions about the CEO pay in the upcoming AGM. In saying that, any proposed increase to CEO compensation will still be assessed on how reasonable it is based on performance and industry benchmarks.

While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. That's why we did some digging and identified 2 warning signs for Hang Chi Holdings that you should be aware of before investing.

Switching gears from Hang Chi Holdings, 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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