How Should Investors React To Telecom Digital Holdings' (HKG:6033) CEO Pay?

This article will reflect on the compensation paid to Sunny Cheung who has served as CEO of Telecom Digital Holdings Limited (HKG:6033) since 2015. This analysis will also assess whether Telecom Digital Holdings pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

See our latest analysis for Telecom Digital Holdings

Comparing Telecom Digital Holdings Limited's CEO Compensation With the industry

According to our data, Telecom Digital Holdings Limited has a market capitalization of HK$900m, and paid its CEO total annual compensation worth HK$1.7m over the year to March 2020. That's a fairly small increase of 6.7% over the previous year. In particular, the salary of HK$1.71m, 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 under HK$1.6b, the reported median total CEO compensation was HK$2.1m. From this we gather that Sunny Cheung is paid around the median for CEOs in the industry. Furthermore, Sunny Cheung directly owns HK$46m worth of shares in the company, implying that they are deeply invested in the company's success.

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. Telecom Digital Holdings is focused on going down a more traditional approach and is paying a higher portion of compensation through salary, as compared to non-salary benefits. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

A Look at Telecom Digital Holdings Limited's Growth Numbers

Earnings per share at Telecom Digital Holdings Limited are much the same as they were three years ago, albeit with slightly higher. Its revenue is down 16% over the previous year.

We would prefer it if there was revenue growth, but it is good to see a modest EPS growth at least. In conclusion we can't form a strong opinion about business performance yet; but it's one worth watching. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Telecom Digital Holdings Limited Been A Good Investment?

Since shareholders would have lost about 2.8% over three years, some Telecom Digital Holdings Limited investors would surely be feeling negative emotions. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

In Summary...

Sunny receives almost all of their compensation through a salary. As we noted earlier, Telecom Digital Holdings pays its CEO in line with similar-sized companies belonging to the same industry. Meanwhile, Telecom Digital Holdings is suffering from adverse shareholder returns and althoughEPS have grown over the past three years, they have not been extraordinary. We'd stop short of saying CEO compensation is inappropriate, but without an improvement in performance, it's sure to draw criticism. Shareholders will also not want to see performance improving before agreeing to any raise.

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 Telecom Digital Holdings that investors should think about before committing capital to this stock.

Switching gears from Telecom Digital 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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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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