How Should Investors React To Modern Living Investments Holdings' (HKG:8426) CEO Pay?

Fuk Wah Ng has been the CEO of Modern Living Investments Holdings Limited (HKG:8426) since 2017, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Modern Living Investments Holdings.

Check out our latest analysis for Modern Living Investments Holdings

How Does Total Compensation For Fuk Wah Ng Compare With Other Companies In The Industry?

At the time of writing, our data shows that Modern Living Investments Holdings Limited has a market capitalization of HK$148m, and reported total annual CEO compensation of HK$954k for the year to December 2019. That is, the compensation was roughly the same as last year. We note that the salary portion, which stands at HK$936.0k constitutes the majority of total compensation received by the CEO.

On comparing similar-sized companies in the industry with market capitalizations below HK$1.6b, we found that the median total CEO compensation was HK$1.8m. This suggests that Fuk Wah Ng is paid below the industry median. What's more, Fuk Wah Ng holds HK$7.0m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Talking in terms of the industry, salary represented approximately 70% of total compensation out of all the companies we analyzed, while other remuneration made up 30% of the pie. Modern Living Investments Holdings pays a high salary, concentrating more on this aspect of compensation in comparison to non-salary pay. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

A Look at Modern Living Investments Holdings Limited's Growth Numbers

Modern Living Investments Holdings Limited's earnings per share (EPS) grew 78% per year over the last three years. It achieved revenue growth of 4.3% over the last year.

Shareholders would be glad to know that the company has improved itself over the last few years. It's nice to see revenue heading northwards, as this is consistent with healthy business conditions. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Modern Living Investments Holdings Limited Been A Good Investment?

Since shareholders would have lost about 11% over three years, some Modern Living Investments Holdings Limited investors would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

Modern Living Investments Holdings pays its CEO a majority of compensation through a salary. As we noted earlier, Modern Living Investments Holdings pays its CEO lower than the norm for similar-sized companies belonging to the same industry. However we must not forget that the EPS growth has been very strong over three years. Considering EPS are on the up, we would say Fuk Wah is compensated fairly. Shareholders, though, would ideally like to see shareholder returns head north before they agree to any raise.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. We've identified 2 warning signs for Modern Living Investments Holdings that investors should be aware of in a dynamic business environment.

Switching gears from Modern Living Investments Holdings, 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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