How Should Investors Feel About E Lighting Group Holdings' (HKG:8222) CEO Remuneration?

The CEO of E Lighting Group Holdings Limited (HKG:8222) is Raymond Hui, and this article examines 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.

Check out our latest analysis for E Lighting Group Holdings

How Does Total Compensation For Raymond Hui Compare With Other Companies In The Industry?

At the time of writing, our data shows that E Lighting Group Holdings Limited has a market capitalization of HK$23m, and reported total annual CEO compensation of HK$2.1m for the year to March 2020. Notably, that's a decrease of 10% over the year before. We note that the salary portion, which stands at HK$2.04m constitutes the majority of total compensation received by the CEO.

For comparison, other companies in the industry with market capitalizations below HK$1.6b, reported a median total CEO compensation of HK$2.1m. So it looks like E Lighting Group Holdings compensates Raymond Hui in line with the median for the industry. Furthermore, Raymond Hui directly owns HK$11m worth of shares in the company, implying that they are deeply invested in the company's success.

Speaking on an industry level, nearly 91% of total compensation represents salary, while the remainder of 8.9% is other remuneration. E Lighting Group Holdings has gone down a largely traditional route, paying Raymond Hui a high salary, giving it preference over non-salary benefits. 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.

E Lighting Group Holdings Limited's Growth

E Lighting Group Holdings Limited's earnings per share (EPS) grew 39% per year over the last three years. In the last year, its revenue is up 2.0%.

This demonstrates that the company has been improving recently and is good news for the shareholders. It's good to see a bit of revenue growth, as this suggests the business is able to grow sustainably. 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 E Lighting Group Holdings Limited Been A Good Investment?

Since shareholders would have lost about 75% over three years, some E Lighting Group Holdings Limited investors would surely be feeling negative emotions. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

In Summary...

Raymond receives almost all of their compensation through a salary. As previously discussed, Raymond is compensated close to the median for companies of its size, and which belong to the same industry. On the other hand, the company has logged negative shareholder returns over the previous three years. However, EPS growth is positive over the same time frame. Overall, we wouldn't say Raymond is paid an unjustified compensation, but shareholders might not favor a raise before shareholder returns show a positive trend.

CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. That's why we did our research, and identified 3 warning signs for E Lighting Group Holdings (of which 2 are potentially serious!) that you should know about in order to have a holistic understanding of the stock.

Switching gears from E Lighting Group 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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