Benny Chong became the CEO of Auto Italia Holdings Limited (HKG:720) in 2013, 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 assess whether Auto Italia Holdings pays its CEO appropriately, considering recent earnings growth and total shareholder returns.
See our latest analysis for Auto Italia Holdings
How Does Total Compensation For Benny Chong Compare With Other Companies In The Industry?
At the time of writing, our data shows that Auto Italia Holdings Limited has a market capitalization of HK$891m, and reported total annual CEO compensation of HK$3.3m for the year to December 2019. That's a slight decrease of 4.0% on the prior year. We note that the salary portion, which stands at HK$3.26m 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$2.1m. This suggests that Benny Chong is paid more than the median for the industry. What's more, Benny Chong holds HK$8.8m 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$3.3m | HK$3.1m | 99% |
| Other | HK$18k | HK$279k | 1% |
| Total Compensation | HK$3.3m | HK$3.4m | 100% |
On an industry level, around 90% of total compensation represents salary and 9.6% is other remuneration. Auto Italia Holdings pays a high salary, concentrating more on this aspect of compensation in comparison to non-salary pay. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.
Auto Italia Holdings Limited's Growth
Over the last three years, Auto Italia Holdings Limited has shrunk its earnings per share by 108% per year. Its revenue is down 47% over the previous year.
Overall this is not a very positive result for shareholders. And the impression is worse when you consider revenue is down year-on-year. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.
Has Auto Italia Holdings Limited Been A Good Investment?
We think that the total shareholder return of 40%, over three years, would leave most Auto Italia Holdings Limited shareholders smiling. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.
To Conclude...
Auto Italia Holdings pays its CEO a majority of compensation through a salary. As previously discussed, Benny is compensated more than what is normal for CEOs of companies of similar size, and which belong to the same industry. We're not seeing great strides in EPS, but the company has clearly pleased some investors, given the returns over the last three years. Considering positive investor returns, it would be bold of us to criticize CEO compensation, but shareholders might want to see healthier EPS growth before a raise is given out.
While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. That's why we did some digging and identified 1 warning sign for Auto Italia Holdings that you should be aware of before investing.
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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About SEHK:720
Auto Italia Holdings
An investment holding company, engages in the marketing, distribution, and after-sales servicing of Italian branded cars in the People’s Republic of China, the United Kingdom, and Hong Kong.
Mediocre balance sheet low.
