How Should Investors Feel About TOM Group's (HKG:2383) CEO Remuneration?

Ken Yeung became the CEO of TOM Group Limited (HKG:2383) in 2008, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for TOM Group.

Check out our latest analysis for TOM Group

Comparing TOM Group Limited's CEO Compensation With the industry

Our data indicates that TOM Group Limited has a market capitalization of HK$2.9b, and total annual CEO compensation was reported as HK$6.1m for the year to December 2019. This means that the compensation hasn't changed much from last year. In particular, the salary of HK$5.67m, 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 ranging from HK$1.6b to HK$6.2b, the reported median CEO total compensation was HK$7.1m. From this we gather that Ken Yeung is paid around the median for CEOs in the industry.

On an industry level, around 84% of total compensation represents salary and 16% is other remuneration. It's interesting to note that TOM Group pays out a greater portion of remuneration through salary, compared to the industry. 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.

A Look at TOM Group Limited's Growth Numbers

TOM Group Limited has seen its earnings per share (EPS) increase by 6.9% a year over the past three years. It saw its revenue drop 7.9% over the last year.

We would prefer it if there was revenue growth, but it is good to see a modest EPS growth at least. In conclusion we can't form a strong opinion about business performance yet; but it's one worth watching. 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 TOM Group Limited Been A Good Investment?

Given the total shareholder loss of 65% over three years, many shareholders in TOM Group Limited are probably rather dissatisfied, to say the least. So shareholders would probably want the company to be lessto generous with CEO compensation.

To Conclude...

As we touched on above, TOM Group 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. This doesn't look good when you place it against the backdrop of negative shareholder returns and flat EPS growth. Although we wouldn't say CEO compensation is exceptionally high, it isn't very low either. Shareholders might want to see substantial improvements in returns before agreeing that Ken deserves a raise.

CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. That's why we did some digging and identified 1 warning sign for TOM Group that investors should think about before committing capital to this stock.

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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