What We Learned About Wharf Real Estate Investment's (HKG:1997) CEO Pay

Stephen Ng has been the CEO of Wharf Real Estate Investment Company Limited (HKG:1997) since 2017, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also assess whether Wharf Real Estate Investment pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

See our latest analysis for Wharf Real Estate Investment

Comparing Wharf Real Estate Investment Company Limited's CEO Compensation With the industry

Our data indicates that Wharf Real Estate Investment Company Limited has a market capitalization of HK$112b, and total annual CEO compensation was reported as HK$13m for the year to December 2019. We note that's a decrease of 39% compared to last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at HK$3.5m.

For comparison, other companies in the industry with market capitalizations above HK$62b, reported a median total CEO compensation of HK$22m. That is to say, Stephen Ng is paid under the industry median. Moreover, Stephen Ng also holds HK$54m worth of Wharf Real Estate Investment stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

On an industry level, roughly 70% of total compensation represents salary and 30% is other remuneration. In Wharf Real Estate Investment's case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

A Look at Wharf Real Estate Investment Company Limited's Growth Numbers

Over the last three years, Wharf Real Estate Investment Company Limited has shrunk its earnings per share by 47% per year. It saw its revenue drop 15% over the last year.

Overall this is not a very positive result for shareholders. And the fact that revenue is down year on year arguably paints an ugly picture. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.

Has Wharf Real Estate Investment Company Limited Been A Good Investment?

Given the total shareholder loss of 9.9% over three years, many shareholders in Wharf Real Estate Investment Company Limited are probably rather dissatisfied, to say the least. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

As we noted earlier, Wharf Real Estate Investment pays its CEO lower than the norm for similar-sized companies belonging to the same industry. EPS growth has failed to impress us, and the same can be said about shareholder returns. We can't say the CEO compensation is high, but shareholders will be cold to a bump at this stage, considering negative investor returns.

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 Wharf Real Estate Investment 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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