How Much Is Luks Group (Vietnam Holdings)'s (HKG:366) CEO Getting Paid?

This article will reflect on the compensation paid to Cheung Cheng who has served as CEO of Luks Group (Vietnam Holdings) Company Limited (HKG:366) since 2015. This analysis will also assess whether Luks Group (Vietnam Holdings) pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

View our latest analysis for Luks Group (Vietnam Holdings)

Comparing Luks Group (Vietnam Holdings) Company Limited's CEO Compensation With the industry

Our data indicates that Luks Group (Vietnam Holdings) Company Limited has a market capitalization of HK$643m, and total annual CEO compensation was reported as HK$3.1m for the year to December 2019. That is, the compensation was roughly the same as last year. We note that the salary portion, which stands at HK$2.99m constitutes the majority of total compensation received by the CEO.

For comparison, other companies in the industry with market capitalizations below HK$1.6b, reported a median total CEO compensation of HK$794k. Accordingly, our analysis reveals that Luks Group (Vietnam Holdings) Company Limited pays Cheung Cheng north of the industry median. Moreover, Cheung Cheng also holds HK$74m worth of Luks Group (Vietnam Holdings) stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Speaking on an industry level, nearly 66% of total compensation represents salary, while the remainder of 34% is other remuneration. Luks Group (Vietnam Holdings) has gone down a largely traditional route, paying Cheung Cheng a high salary, giving it preference over non-salary benefits. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

Luks Group (Vietnam Holdings) Company Limited's Growth

Over the last three years, Luks Group (Vietnam Holdings) Company Limited has shrunk its earnings per share by 5.4% per year. Its revenue is down 13% over the previous year.

The decline in EPS is a bit concerning. 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. While we don't have analyst forecasts for the company, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.

Has Luks Group (Vietnam Holdings) Company Limited Been A Good Investment?

Since shareholders would have lost about 39% over three years, some Luks Group (Vietnam Holdings) Company Limited investors would surely be feeling negative emotions. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

To Conclude...

Cheung receives almost all of their compensation through a salary. As we touched on above, Luks Group (Vietnam Holdings) Company Limited is currently paying its CEO higher than the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. This doesn't look good against shareholder returns, which have been negative for the past three years. Add to that declining EPS growth, and you have the perfect recipe for shareholder irritation. Considering such poor performance, we think shareholders might be concerned if the CEO's compensation were to grow.

CEO compensation can have a massive impact on performance, but it's just one element. We did our research and spotted 4 warning signs for Luks Group (Vietnam Holdings) that investors should look into moving forward.

Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.

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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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