How Should Investors Feel About Guru Online (Holdings)'s (HKG:8121) CEO Remuneration?
The CEO of Guru Online (Holdings) Limited (HKG:8121) is Alan Yip, and this article examines the executive's compensation against the backdrop of overall company performance. This analysis will also assess whether Guru Online (Holdings) pays its CEO appropriately, considering recent earnings growth and total shareholder returns.
See our latest analysis for Guru Online (Holdings)
How Does Total Compensation For Alan Yip Compare With Other Companies In The Industry?
According to our data, Guru Online (Holdings) Limited has a market capitalization of HK$32m, and paid its CEO total annual compensation worth HK$8.1m over the year to March 2020. We note that's a decrease of 8.2% compared to last year. We note that the salary portion, which stands at HK$5.77m 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$2.6m. This suggests that Alan Yip is paid more than the median for the industry.
| Component | 2020 | 2019 | Proportion (2020) |
| Salary | HK$5.8m | HK$5.7m | 71% |
| Other | HK$2.4m | HK$3.2m | 29% |
| Total Compensation | HK$8.1m | HK$8.8m | 100% |
On an industry level, around 84% of total compensation represents salary and 16% is other remuneration. In Guru Online (Holdings)'s case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. 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 Guru Online (Holdings) Limited's Growth Numbers
Guru Online (Holdings) Limited has seen its earnings per share (EPS) increase by 3.8% a year over the past three years. Its revenue is down 25% over the previous year.
We generally like to see a little revenue growth, but the modest EPSgrowth gives us some relief. 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 Guru Online (Holdings) Limited Been A Good Investment?
Since shareholders would have lost about 81% over three years, some Guru Online (Holdings) Limited investors would surely be feeling negative emotions. So shareholders would probably want the company to be lessto generous with CEO compensation.
In Summary...
As we noted earlier, Guru Online (Holdings) pays its CEO higher than the norm for similar-sized companies belonging to the same industry. While we have not been overly impressed by the business performance, the shareholder returns have been utterly depressing, over the last three years. This doesn't look great when you consider Alan is taking home compensation north of the industry average. Taking all this into account, it could be hard to get shareholder support for giving Alan 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 identified 3 warning signs for Guru Online (Holdings) (2 are significant!) that you should be aware of before investing here.
Important note: Guru Online (Holdings) is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE 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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About SEHK:8121
Guoen Holdings
An investment holding company, provides integrated digital marketing services in Hong Kong, Taiwan, and the People's Republic of China.
Excellent balance sheet with proven track record.
