How Should Investors React To K. Wah International Holdings Limited's (HKG:173) CEO Pay?

By
Simply Wall St
Published
March 04, 2020
SEHK:173

Che-Woo Lui is the CEO of K. Wah International Holdings Limited (HKG:173). First, this article will compare CEO compensation with compensation at similar sized companies. Next, we'll consider growth that the business demonstrates. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. The aim of all this is to consider the appropriateness of CEO pay levels.

Check out our latest analysis for K. Wah International Holdings

How Does Che-Woo Lui's Compensation Compare With Similar Sized Companies?

Our data indicates that K. Wah International Holdings Limited is worth HK$12b, and total annual CEO compensation was reported as HK$21m for the year to December 2018. While we always look at total compensation first, we note that the salary component is less, at HK$13m. When we examined a selection of companies with market caps ranging from HK$7.8b to HK$25b, we found the median CEO total compensation was HK$4.4m.

Thus we can conclude that Che-Woo Lui receives more in total compensation than the median of a group of companies in the same market, and of similar size to K. Wah International Holdings Limited. However, this doesn't necessarily mean the pay is too high. A closer look at the performance of the underlying business will give us a better idea about whether the pay is particularly generous.

You can see, below, how CEO compensation at K. Wah International Holdings has changed over time.

SEHK:173 CEO Compensation, March 4th 2020
SEHK:173 CEO Compensation, March 4th 2020

Is K. Wah International Holdings Limited Growing?

K. Wah International Holdings Limited has increased its earnings per share (EPS) by an average of 11% a year, over the last three years (using a line of best fit). Its revenue is up 118% over last year.

This shows that the company has improved itself over the last few years. Good news for shareholders. The combination of strong revenue growth with medium-term earnings per share improvement certainly points to the kind of growth I like to see. It could be important to check this free visual depiction of what analysts expect for the future.

Has K. Wah International Holdings Limited Been A Good Investment?

Given the total loss of 2.9% over three years, many shareholders in K. Wah International Holdings Limited are probably rather dissatisfied, to say the least. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

We compared the total CEO remuneration paid by K. Wah International Holdings Limited, and compared it to remuneration at a group of similar sized companies. Our data suggests that it pays above the median CEO pay within that group.

However we must not forget that the EPS growth has been very strong over three years. On the other hand returns to investors over the same period have probably disappointed many. While EPS is positive, we'd say shareholders would want better returns before the CEO is paid much more. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling K. Wah International Holdings (free visualization of insider trades).

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

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.

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