Edward Cheng has been the CEO of Wing Tai Properties Limited (HKG:369) since 1994, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also assess whether Wing Tai Properties pays its CEO appropriately, considering recent earnings growth and total shareholder returns.
Check out our latest analysis for Wing Tai Properties
Comparing Wing Tai Properties Limited's CEO Compensation With the industry
According to our data, Wing Tai Properties Limited has a market capitalization of HK$4.9b, and paid its CEO total annual compensation worth HK$23m over the year to December 2019. That's a modest increase of 6.0% on the prior year. In particular, the salary of HK$12.6m, makes up a huge portion of the total compensation being paid to the CEO.
In comparison with other companies in the industry with market capitalizations ranging from HK$3.1b to HK$12b, the reported median CEO total compensation was HK$5.3m. Hence, we can conclude that Edward Cheng is remunerated higher than the industry median. What's more, Edward Cheng holds HK$44m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.
| Component | 2019 | 2018 | Proportion (2019) |
| Salary | HK$13m | HK$12m | 55% |
| Other | HK$10m | HK$10.0m | 45% |
| Total Compensation | HK$23m | HK$22m | 100% |
On an industry level, around 70% of total compensation represents salary and 30% is other remuneration. In Wing Tai Properties' case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.
A Look at Wing Tai Properties Limited's Growth Numbers
Over the last three years, Wing Tai Properties Limited has shrunk its earnings per share by 68% per year. In the last year, its revenue is up 142%.
The reduction in EPS, over three years, is arguably concerning. 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. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..
Has Wing Tai Properties Limited Been A Good Investment?
Given the total shareholder loss of 20% over three years, many shareholders in Wing Tai Properties Limited are probably rather dissatisfied, to say the least. Therefore, it might be upsetting for shareholders if the CEO were paid generously.
In Summary...
As we noted earlier, Wing Tai Properties pays its CEO higher than the norm for similar-sized companies belonging to the same industry. At the same time, looking at EPS and total shareholder returns, it's tough to say Wing Tai Properties is in a sound position, considering both metrics are down. On the bright side, at lease revenue growth seems to be marching northward. Suffice it to say, we don't think the CEO is underpaid!
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 Wing Tai Properties that you should be aware of before investing.
Switching gears from Wing Tai Properties, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.
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About SEHK:369
Wing Tai Properties
An investment holding company, engages in the investment, development, and management of properties in Hong Kong, the United Kingdom, the People’s Republic of China, Singapore, and internationally.
Moderate growth potential with mediocre balance sheet.
