Why International Business Settlement Holdings' (HKG:147) CEO Pay Matters

The CEO of International Business Settlement Holdings Limited (HKG:147) is Leong Yuen, and this article examines the executive's compensation against the backdrop of overall company performance. This analysis will also assess whether International Business Settlement Holdings pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

See our latest analysis for International Business Settlement Holdings

Comparing International Business Settlement Holdings Limited's CEO Compensation With the industry

At the time of writing, our data shows that International Business Settlement Holdings Limited has a market capitalization of HK$1.9b, and reported total annual CEO compensation of HK$960k for the year to March 2020. That is, the compensation was roughly the same as last year. Notably, the salary of HK$960k is the entirety of the CEO compensation.

In comparison with other companies in the industry with market capitalizations ranging from HK$775m to HK$3.1b, the reported median CEO total compensation was HK$3.4m. This suggests that Leong Yuen is paid below the industry median.

On an industry level, around 70% of total compensation represents salary and 30% is other remuneration. Speaking on a company level, International Business Settlement Holdings prefers to tread along a traditional path, disbursing all compensation through a salary. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

International Business Settlement Holdings Limited's Growth

International Business Settlement Holdings Limited has reduced its earnings per share by 39% a year over the last three years. Its revenue is down 60% over the previous year.

The decline in EPS is a bit concerning. 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 International Business Settlement Holdings Limited Been A Good Investment?

Since shareholders would have lost about 77% over three years, some International Business Settlement Holdings Limited investors would surely be feeling negative emotions. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

In Summary...

International Business Settlement Holdings pays CEO compensation exclusively through a salary, with non-salary compensation completely ignored. As we touched on above, International Business Settlement Holdings Limited is currently paying its CEO below the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. EPS growth has failed to impress us, and the same can be said about shareholder returns. Although we wouldn’t say CEO compensation is high, it’s tough to foresee shareholders warming up to thoughts of a bump anytime soon.

CEO compensation can have a massive impact on performance, but it's just one element. That's why we did some digging and identified 1 warning sign for International Business Settlement Holdings that you should be aware of before investing.

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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