How Should Investors Feel About Vongroup's (HKG:318) CEO Remuneration?

This article will reflect on the compensation paid to David Vong who has served as CEO of Vongroup Limited (HKG:318) since 2005. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Vongroup.

Check out our latest analysis for Vongroup

Comparing Vongroup Limited's CEO Compensation With the industry

At the time of writing, our data shows that Vongroup Limited has a market capitalization of HK$119m, and reported total annual CEO compensation of HK$1.4m for the year to April 2020. That's a notable decrease of 62% on last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at HK$600k.

For comparison, other companies in the industry with market capitalizations below HK$1.6b, reported a median total CEO compensation of HK$1.8m. From this we gather that David Vong is paid around the median for CEOs in the industry. What's more, David Vong holds HK$59m 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, around 70% of total compensation represents salary and 30% is other remuneration. Vongroup pays a modest slice of remuneration through salary, as compared to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

A Look at Vongroup Limited's Growth Numbers

Over the last three years, Vongroup Limited has shrunk its earnings per share by 14% per year. It achieved revenue growth of 106% over the last year.

Investors would be a bit wary of companies that have lower EPS But in contrast the revenue growth is strong, suggesting future potential for EPS growth. It's hard to reach a conclusion about business performance right now. This may be one to watch. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Vongroup Limited Been A Good Investment?

Given the total shareholder loss of 35% over three years, many shareholders in Vongroup 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 we touched on above, Vongroup Limited is currently paying a compensation that's close to the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. But revenue growth seems to be inching northward, a heartening sign for the company. On the other hand, shareholder returns for David are negative over the same period. EPS growth is bleak as well, adding fuel to the fire. It's tough for us to say David is overpaid but a mixed bag in terms of performance will surely irk shareholders and reduce chances of a raise.

CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. That's why we did some digging and identified 4 warning signs for Vongroup that investors should think about before committing capital to this stock.

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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