How Does King Fook Holdings' (HKG:280) CEO Pay Compare With Company Performance?

Mei Lin Sum became the CEO of King Fook Holdings Limited (HKG:280) in 2017, 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 look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for King Fook Holdings.

Check out our latest analysis for King Fook Holdings

How Does Total Compensation For Mei Lin Sum Compare With Other Companies In The Industry?

According to our data, King Fook Holdings Limited has a market capitalization of HK$265m, and paid its CEO total annual compensation worth HK$2.4m over the year to March 2020. That's a slightly lower by 5.4% over the previous year. Notably, the salary which is HK$2.37m, represents most of the total compensation being paid.

In comparison with other companies in the industry with market capitalizations under HK$1.6b, the reported median total CEO compensation was HK$2.1m. So it looks like King Fook Holdings compensates Mei Lin Sum in line with the median for the industry.

Talking in terms of the industry, salary represented approximately 91% of total compensation out of all the companies we analyzed, while other remuneration made up 9.2% of the pie. King Fook 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 King Fook Holdings Limited's Growth Numbers

Over the past three years, King Fook Holdings Limited has seen its earnings per share (EPS) grow by 125% per year. It saw its revenue drop 5.6% over the last year.

Shareholders would be glad to know that the company has improved itself over the last few years. It's always a tough situation when revenues are not growing, but ultimately profits are more important. 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 King Fook Holdings Limited Been A Good Investment?

Since shareholders would have lost about 36% over three years, some King Fook Holdings Limited investors would surely be feeling negative emotions. So shareholders would probably want the company to be lessto generous with CEO compensation.

To Conclude...

King Fook Holdings pays its CEO a majority of compensation through a salary. As we noted earlier, King Fook Holdings pays its CEO in line with similar-sized companies belonging to the same industry. On the other hand, the company has logged negative shareholder returns over the previous three years. But on the bright side, EPS growth is positive over the same period. It's tough for us to say CEO compensation is too generous when EPS growth is positive, but negative investor returns will irk shareholders and reduce any chances of a raise.

While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. We did our research and spotted 1 warning sign for King Fook Holdings that investors should look into moving forward.

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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