Tun Nei Cheng became the CEO of Symphony Holdings Limited (HKG:1223) in 2015, 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 evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.
See our latest analysis for Symphony Holdings
Comparing Symphony Holdings Limited's CEO Compensation With the industry
According to our data, Symphony Holdings Limited has a market capitalization of HK$2.6b, and paid its CEO total annual compensation worth HK$2.6m over 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$2.40m constitutes the majority of total compensation received by the CEO.
In comparison with other companies in the industry with market capitalizations ranging from HK$1.6b to HK$6.2b, the reported median CEO total compensation was HK$3.0m. From this we gather that Tun Nei Cheng is paid around the median for CEOs in the industry. What's more, Tun Nei Cheng holds HK$1.0b 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$2.4m | HK$2.4m | 92% |
| Other | HK$218k | HK$218k | 8% |
| Total Compensation | HK$2.6m | HK$2.6m | 100% |
Talking in terms of the industry, salary represented approximately 90% of total compensation out of all the companies we analyzed, while other remuneration made up 9.6% of the pie. There isn't a significant difference between Symphony Holdings and the broader market, in terms of salary allocation in the overall compensation package. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.
Symphony Holdings Limited's Growth
Over the last three years, Symphony Holdings Limited has shrunk its earnings per share by 32% per year. It saw its revenue drop 15% over the last year.
The decline in EPS is a bit concerning. And the impression is worse when you consider revenue is down year-on-year. These factors suggest that the business performance wouldn't really justify a high pay packet 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 Symphony Holdings Limited Been A Good Investment?
Given the total shareholder loss of 5.1% over three years, many shareholders in Symphony Holdings 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 previously discussed, Tun Nei is compensated close to the median for companies of its size, and which belong to the same industry. Meanwhile, EPS growth and shareholder returns have been in the red for the last three years. Considering overall performance, shareholders will likely hold off support for a raise until results improve.
CEO pay is simply one of the many factors that need to be considered while examining business performance. We did our research and identified 3 warning signs (and 2 which shouldn't be ignored) in Symphony Holdings we think you should know about.
Important note: Symphony Holdings is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE 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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About SEHK:1223
Symphony Holdings
An investment holding company, primarily operates as a retailing company.
Adequate balance sheet and slightly overvalued.
