Key Things To Understand About Ngai Hing Hong's (HKG:1047) CEO Pay Cheque

The CEO of Ngai Hing Hong Company Limited (HKG:1047) is Kwok Kwong Hui, and this article examines the executive's compensation against the backdrop of overall company performance. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.

Check out our latest analysis for Ngai Hing Hong

How Does Total Compensation For Kwok Kwong Hui Compare With Other Companies In The Industry?

According to our data, Ngai Hing Hong Company Limited has a market capitalization of HK$144m, and paid its CEO total annual compensation worth HK$4.3m over the year to June 2020. That's a slight decrease of 5.3% on the prior year. We note that the salary portion, which stands at HK$2.38m constitutes the majority of total compensation received by the CEO.

On comparing similar-sized companies in the industry with market capitalizations below HK$1.6b, we found that the median total CEO compensation was HK$1.5m. Hence, we can conclude that Kwok Kwong Hui is remunerated higher than the industry median. What's more, Kwok Kwong Hui holds HK$7.3m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

On an industry level, roughly 58% of total compensation represents salary and 42% is other remuneration. Although there is a difference in how total compensation is set, Ngai Hing Hong more or less reflects the market in terms of setting the salary. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

A Look at Ngai Hing Hong Company Limited's Growth Numbers

Over the last three years, Ngai Hing Hong Company Limited has shrunk its earnings per share by 71% per year. Its revenue is down 15% over the previous year.

Few shareholders would be pleased to read that EPS have declined. And the impression is worse when you consider revenue is down year-on-year. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. 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 Ngai Hing Hong Company Limited Been A Good Investment?

Given the total shareholder loss of 52% over three years, many shareholders in Ngai Hing Hong Company Limited are probably rather dissatisfied, to say the least. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

To Conclude...

As previously discussed, Kwok Kwong is compensated more than what is normal for CEOs of companies of similar size, and which belong to the same industry. Disappointingly, share price gains over the last three years have failed to materialize. Add to that declining EPS growth, and you have the perfect recipe for shareholder irritation. Overall, with such poor performance, shareholder's would probably have questions if the company decided to give the CEO a raise.

CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. We did our research and identified 3 warning signs (and 1 which makes us a bit uncomfortable) in Ngai Hing Hong we think you should know about.

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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