Key Things To Understand About eSun Holdings' (HKG:571) CEO Pay Cheque

Richard Lui became the CEO of eSun Holdings Limited (HKG:571) in 2011, 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 eSun Holdings.

See our latest analysis for eSun Holdings

Comparing eSun Holdings Limited's CEO Compensation With the industry

Our data indicates that eSun Holdings Limited has a market capitalization of HK$865m, and total annual CEO compensation was reported as HK$3.9m for the year to July 2020. That's a slightly lower by 3.7% over the previous year. In particular, the salary of HK$3.72m, 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$1.5m. Accordingly, our analysis reveals that eSun Holdings Limited pays Richard Lui north of the industry median.

On an industry level, roughly 89% of total compensation represents salary and 11% is other remuneration. eSun Holdings has gone down a largely traditional route, paying Richard Lui 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.

eSun Holdings Limited's Growth

Over the last three years, eSun Holdings Limited has shrunk its earnings per share by 120% per year. Its revenue is down 37% over the previous year.

Overall this is not a very positive result for shareholders. This is compounded by the fact revenue is actually down on last year. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has eSun Holdings Limited Been A Good Investment?

Given the total shareholder loss of 56% over three years, many shareholders in eSun Holdings 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...

eSun Holdings pays its CEO a majority of compensation through a salary. As we touched on above, eSun Holdings 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. What's equally worrying is that the company isn't growing by our analysis. 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. In our study, we found 2 warning signs for eSun Holdings you should be aware of, and 1 of them can't be ignored.

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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