Does Nanyang Holdings' (HKG:212) CEO Salary Compare Well With The Performance Of The Company?

Ching Yung Hung became the CEO of Nanyang Holdings Limited (HKG:212) in 1947, 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 assess whether Nanyang Holdings pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

See our latest analysis for Nanyang Holdings

Comparing Nanyang Holdings Limited's CEO Compensation With the industry

At the time of writing, our data shows that Nanyang Holdings Limited has a market capitalization of HK$1.4b, and reported total annual CEO compensation of HK$8.4m for the year to December 2019. That's just a smallish increase of 5.5% on last year. We note that the salary portion, which stands at HK$5.56m constitutes the majority of total compensation received by the CEO.

For comparison, other companies in the same industry with market capitalizations ranging between HK$775m and HK$3.1b had a median total CEO compensation of HK$3.4m. Hence, we can conclude that Ching Yung Hung is remunerated higher than the industry median. Furthermore, Ching Yung Hung directly owns HK$431m worth of shares in the company, implying that they are deeply invested in the company's success.

On an industry level, roughly 70% of total compensation represents salary and 30% is other remuneration. Although there is a difference in how total compensation is set, Nanyang Holdings more or less reflects the market in terms of setting the salary. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

Nanyang Holdings Limited's Growth

Over the last three years, Nanyang Holdings Limited has shrunk its earnings per share by 53% per year. It saw its revenue drop 7.8% over the last year.

Few shareholders would be pleased to read that EPS have declined. 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. 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 Nanyang Holdings Limited Been A Good Investment?

Given the total shareholder loss of 5.9% over three years, many shareholders in Nanyang 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...

As previously discussed, Ching Yung is compensated more than what is normal for CEOs of companies of similar size, and which belong to the same industry. 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. Considering such poor performance, we think shareholders might be concerned if the CEO's compensation were to grow.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. We did our research and identified 2 warning signs (and 1 which doesn't sit too well with us) in Nanyang Holdings we think you should know about.

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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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