How Should Investors React To Hang Sang (Siu Po) International Holding's (HKG:3626) CEO Pay?

This article will reflect on the compensation paid to Samson Fung who has served as CEO of Hang Sang (Siu Po) International Holding Company Limited (HKG:3626) since 2015. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Hang Sang (Siu Po) International Holding.

View our latest analysis for Hang Sang (Siu Po) International Holding

Comparing Hang Sang (Siu Po) International Holding Company Limited's CEO Compensation With the industry

According to our data, Hang Sang (Siu Po) International Holding Company Limited has a market capitalization of HK$71m, and paid its CEO total annual compensation worth HK$2.2m over the year to June 2020. That's mostly flat as compared to the prior year's compensation. In particular, the salary of HK$2.15m, makes up a huge portion of the total compensation being paid to the CEO.

For comparison, other companies in the industry with market capitalizations below HK$1.6b, reported a median total CEO compensation of HK$2.2m. This suggests that Hang Sang (Siu Po) International Holding remunerates its CEO largely in line with the industry average.

Speaking on an industry level, nearly 78% of total compensation represents salary, while the remainder of 22% is other remuneration. Investors will find it interesting that Hang Sang (Siu Po) International Holding pays the bulk of its rewards through a traditional salary, instead of non-salary benefits. 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 Sang (Siu Po) International Holding Company Limited's Growth

Over the last three years, Hang Sang (Siu Po) International Holding Company Limited has shrunk its earnings per share by 84% per year. It saw its revenue drop 21% over the last year.

The decline in EPS is a bit concerning. This is compounded by the fact revenue is actually down on last year. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Hang Sang (Siu Po) International Holding Company Limited Been A Good Investment?

With a three year total loss of 79% for the shareholders, Hang Sang (Siu Po) International Holding Company Limited would certainly have some dissatisfied shareholders. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

Samson receives almost all of their compensation through a salary. As we touched on above, Hang Sang (Siu Po) International Holding Company Limited is currently paying a compensation that's close to the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. Meanwhile, EPS growth and shareholder returns have been in the red for the last three years. It's tough to call out the compensation as inappropriate, but shareholders might not favor a raise before company performance improves.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. We identified 3 warning signs for Hang Sang (Siu Po) International Holding (2 shouldn't be ignored!) that you should be aware of before investing here.

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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