This article will reflect on the compensation paid to Andy Lau who has served as CEO of Expert Systems Holdings Limited (HKG:8319) since 2016. This analysis will also assess whether Expert Systems Holdings pays its CEO appropriately, considering recent earnings growth and total shareholder returns.
View our latest analysis for Expert Systems Holdings
Comparing Expert Systems Holdings Limited's CEO Compensation With the industry
Our data indicates that Expert Systems Holdings Limited has a market capitalization of HK$93m, and total annual CEO compensation was reported as HK$2.8m for the year to March 2020. Notably, that's an increase of 10% over the year before. We note that the salary portion, which stands at HK$2.49m 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$1.8m. Hence, we can conclude that Andy Lau is remunerated higher than the industry median. Furthermore, Andy Lau directly owns HK$12m worth of shares in the company, implying that they are deeply invested in the company's success.
| Component | 2020 | 2019 | Proportion (2020) |
| Salary | HK$2.5m | HK$2.4m | 90% |
| Other | HK$283k | HK$140k | 10% |
| Total Compensation | HK$2.8m | HK$2.5m | 100% |
On an industry level, around 60% of total compensation represents salary and 40% is other remuneration. It's interesting to note that Expert Systems Holdings pays out a greater portion of remuneration through salary, compared to the industry. 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.
A Look at Expert Systems Holdings Limited's Growth Numbers
Expert Systems Holdings Limited has seen its earnings per share (EPS) increase by 64% a year over the past three years. In the last year, its revenue is up 8.7%.
This demonstrates that the company has been improving recently and is good news for the shareholders. It's also good to see modest revenue growth, suggesting the underlying business is healthy. 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 Expert Systems Holdings Limited Been A Good Investment?
Given the total shareholder loss of 13% over three years, many shareholders in Expert Systems Holdings Limited are probably rather dissatisfied, to say the least. So shareholders would probably want the company to be lessto generous with CEO compensation.
To Conclude...
As previously discussed, Andy is compensated more than what is normal for CEOs of companies of similar size, and which belong to the same industry. However, we must not forget that the EPS growth has been very strong, 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.
While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. That's why we did some digging and identified 2 warning signs for Expert Systems Holdings 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.
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About SEHK:8319
Expert Systems Holdings
An investment holding company, provides information technology (IT) infrastructure solutions, IT infrastructure management services, and artificial intelligence (AI) products and services.
Excellent balance sheet and good value.
