What Can We Conclude About Luk Fook Holdings (International)'s (HKG:590) CEO Pay?

Wai Sheung Wong is the CEO of Luk Fook Holdings (International) Limited (HKG:590), and in this article, we analyze the executive's compensation package 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 Luk Fook Holdings (International).

View our latest analysis for Luk Fook Holdings (International)

How Does Total Compensation For Wai Sheung Wong Compare With Other Companies In The Industry?

According to our data, Luk Fook Holdings (International) Limited has a market capitalization of HK$11b, and paid its CEO total annual compensation worth HK$55m over the year to March 2020. Notably, that's a decrease of 24% over the year before. Notably, the salary which is HK$44.7m, represents most of the total compensation being paid.

On comparing similar companies from the same industry with market caps ranging from HK$7.8b to HK$25b, we found that the median CEO total compensation was HK$3.0m. This suggests that Wai Sheung Wong is paid more than the median for the industry. Moreover, Wai Sheung Wong also holds HK$155m worth of Luk Fook Holdings (International) stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

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 Luk Fook Holdings (International) and the broader market, in terms of salary allocation in the overall compensation package. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

Luk Fook Holdings (International) Limited's Growth

Over the last three years, Luk Fook Holdings (International) Limited has shrunk its earnings per share by 16% per year. In the last year, its revenue is down 42%.

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. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.

Has Luk Fook Holdings (International) Limited Been A Good Investment?

Since shareholders would have lost about 35% over three years, some Luk Fook Holdings (International) 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...

As we noted earlier, Luk Fook Holdings (International) pays its CEO higher than the norm for similar-sized companies belonging to the same industry. Disappointingly, share price gains over the last three years have failed to materialize. Add to that declining EPS growth, and you have the perfect recipe for shareholder irritation. Considering such poor performance, we think shareholders might be concerned if the CEO's compensation were to grow.

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 1 warning sign for Luk Fook Holdings (International) that you should be aware of before investing.

Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.

When trading Luk Fook Holdings (International) or any other investment, use the platform considered by many to be the Professional's Gateway to the Worlds Market, Interactive Brokers. You get the lowest-cost* trading on stocks, options, futures, forex, bonds and funds worldwide from a single integrated account. Promoted

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.
^*Interactive Brokers Rated Lowest Cost Broker by StockBrokers.com Annual Online Review 2020

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.