Does Asia Orient Holdings' (HKG:214) CEO Salary Compare Well With The Performance Of The Company?

The CEO of Asia Orient Holdings Limited (HKG:214) is Richard Poon, and this article examines the executive's compensation against the backdrop of overall company performance. This analysis will also assess whether Asia Orient Holdings pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

Check out our latest analysis for Asia Orient Holdings

Comparing Asia Orient Holdings Limited's CEO Compensation With the industry

According to our data, Asia Orient Holdings Limited has a market capitalization of HK$807m, and paid its CEO total annual compensation worth HK$31m over the year to March 2020. That's a modest increase of 5.8% on the prior year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at HK$1.3m.

For comparison, other companies in the industry with market capitalizations below HK$1.6b, reported a median total CEO compensation of HK$1.8m. Accordingly, our analysis reveals that Asia Orient Holdings Limited pays Richard Poon north of the industry median. What's more, Richard Poon holds HK$407m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

On an industry level, roughly 70% of total compensation represents salary and 30% is other remuneration. A high-salary is usually a no-brainer when it comes to attracting the best executives, but Asia Orient Holdings paid Richard Poon a nominal salary to the CEO over the past 12 months, instead focusing on non-salary compensation. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

A Look at Asia Orient Holdings Limited's Growth Numbers

Over the last three years, Asia Orient Holdings Limited has shrunk its earnings per share by 14% per year. Revenue was pretty flat on last year.

The decline in EPS is a bit concerning. And the flat revenue is seriously uninspiring. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. We don't have analyst forecasts, but you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.

Has Asia Orient Holdings Limited Been A Good Investment?

Since shareholders would have lost about 53% over three years, some Asia Orient Holdings Limited investors would surely be feeling negative emotions. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

In Summary...

Asia Orient Holdings primarily uses non-salary benefits to reward its CEO. As we touched on above, Asia Orient Holdings Limited is currently paying its CEO higher than the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. This doesn't look good against shareholder returns, which have been negative for the past three years. Add to that declining EPS growth, and you have the perfect recipe for shareholder irritation. 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 identified 3 warning signs for Asia Orient Holdings (2 make us uncomfortable!) that you should be aware of before investing here.

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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