How Should Investors Feel About eForce Holdings Limited’s (HKG:943) CEO Pay?

Liyang Liu has been the CEO of eForce Holdings Limited (HKG:943) since 2010. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. After that, we will consider the growth in the business. Third, we’ll reflect on the total return to shareholders over three years, as a second measure of business performance. The aim of all this is to consider the appropriateness of CEO pay levels.

View our latest analysis for eForce Holdings

How Does Liyang Liu’s Compensation Compare With Similar Sized Companies?

At the time of writing our data says that eForce Holdings Limited has a market cap of HK$1.8b, and is paying total annual CEO compensation of HK$3.0m. (This figure is for the year to December 2017). Notably, the salary of HK$3.0m is the vast majority of the CEO compensation. We looked at a group of companies with market capitalizations from HK$785m to HK$3.1b, and the median CEO total compensation was HK$1.7m.

Thus we can conclude that Liyang Liu receives more in total compensation than the median of a group of companies in the same market, and of similar size to eForce Holdings Limited. However, this doesn’t necessarily mean the pay is too high. We can better assess whether the pay is overly generous by looking into the underlying business performance.

The graphic below shows how CEO compensation at eForce Holdings has changed from year to year.

SEHK:943 CEO Compensation, April 4th 2019
SEHK:943 CEO Compensation, April 4th 2019

Is eForce Holdings Limited Growing?

eForce Holdings Limited has increased its earnings per share (EPS) by an average of 113% a year, over the last three years (using a line of best fit). Its revenue is up 50% over last year.

This shows that the company has improved itself over the last few years. Good news for shareholders. Most shareholders would be pleased to see strong revenue growth combined with EPS growth. This combo suggests a fast growing business. Although we don’t have analyst forecasts, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.

Has eForce Holdings Limited Been A Good Investment?

Most shareholders would probably be pleased with eForce Holdings Limited for providing a total return of 56% over three years. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.

In Summary…

We compared the total CEO remuneration paid by eForce Holdings Limited, and compared it to remuneration at a group of similar sized companies. We found that it pays well over the median amount paid in the benchmark group.

However, the earnings per share growth over three years is certainly impressive. Even better, returns to shareholders have been plentiful, over the same time period. Considering this fine result for shareholders, we daresay the CEO compensation might be apt. So you may want to check if insiders are buying eForce Holdings shares with their own money (free access).

Important note: eForce Holdings may not be the best stock to buy. You might find something better in this list of interesting companies with high ROE and low debt.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.