Ming Ho Chu became the CEO of Microware Group Limited (HKG:1985) in 2016, 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 Microware Group pays its CEO appropriately, considering recent earnings growth and total shareholder returns.
View our latest analysis for Microware Group
Comparing Microware Group Limited's CEO Compensation With the industry
Our data indicates that Microware Group Limited has a market capitalization of HK$219m, and total annual CEO compensation was reported as HK$5.0m for the year to March 2020. We note that's an increase of 30% above last year. Notably, the salary which is HK$3.00m, represents most of the total compensation being paid.
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$1.9m. Hence, we can conclude that Ming Ho Chu is remunerated higher than the industry median. Furthermore, Ming Ho Chu directly owns HK$8.7m worth of shares in the company, implying that they are deeply invested in the company's success.
| Component | 2020 | 2019 | Proportion (2020) |
| Salary | HK$3.0m | HK$2.8m | 60% |
| Other | HK$2.0m | HK$1.1m | 40% |
| Total Compensation | HK$5.0m | HK$3.9m | 100% |
On an industry level, around 60% of total compensation represents salary and 40% is other remuneration. Microware Group is largely mirroring the industry average when it comes to the share a salary enjoys in overall compensation. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.
Microware Group Limited's Growth
Microware Group Limited has seen its earnings per share (EPS) increase by 22% a year over the past three years. It saw its revenue drop 1.9% over the last year.
This demonstrates that the company has been improving recently and is good news for the shareholders. 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 Microware Group Limited Been A Good Investment?
Since shareholders would have lost about 13% over three years, some Microware Group Limited investors would surely be feeling negative emotions. Therefore, it might be upsetting for shareholders if the CEO were paid generously.
To Conclude...
As previously discussed, Ming Ho is compensated more than what is normal for CEOs of companies of similar size, and which belong to the same industry. However, the EPS growth is certainly impressive, but shareholder returns — over the same period — have been disappointing. Although we don't think the CEO pay is too high, considering negative investor returns, it is more generous than modest.
CEO compensation can have a massive impact on performance, but it's just one element. We've identified 3 warning signs for Microware Group that investors should be aware of in a dynamic business environment.
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.
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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:1985
Microware Group
An investment holding company, provides information technology (IT) infrastructure solutions and IT managed services in Hong Kong.
Proven track record with adequate balance sheet.
