Alex Lau became the CEO of Anacle Systems Limited (HKG:8353) in 2006, 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 Anacle Systems pays its CEO appropriately, considering recent earnings growth and total shareholder returns.
Comparing Anacle Systems Limited's CEO Compensation With the industry
According to our data, Anacle Systems Limited has a market capitalization of HK$140m, and paid its CEO total annual compensation worth S$312k over the year to May 2020. We note that's an increase of 13% above last year. In particular, the salary of S$295.8k, makes up a huge portion of the total compensation being paid to the CEO.
For comparison, other companies in the industry with market capitalizations below HK$1.6b, reported a median total CEO compensation of S$176k. This suggests that Alex Lau is paid more than the median for the industry. Moreover, Alex Lau also holds HK$18m worth of Anacle Systems stock directly under their own name, which reveals to us that they have a significant personal stake in the company.
On an industry level, roughly 82% of total compensation represents salary and 18% is other remuneration. According to our research, Anacle Systems has allocated a higher percentage of pay to salary in comparison to the wider 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.
Anacle Systems Limited's Growth
Over the last three years, Anacle Systems Limited has shrunk its earnings per share by 26% per year. It achieved revenue growth of 41% over the last year.
The reduction in EPS, over three years, is arguably concerning. On the other hand, the strong revenue growth suggests the business is growing. It's hard to reach a conclusion about business performance right now. This may be one to watch. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.
Has Anacle Systems Limited Been A Good Investment?
With a three year total loss of 37% for the shareholders, Anacle Systems Limited would certainly have some dissatisfied shareholders. So shareholders would probably want the company to be lessto generous with CEO compensation.
As we noted earlier, Anacle Systems pays its CEO higher than the norm for similar-sized companies belonging to the same industry. It concerns us that EPS growth for the company is negative, while share price gains did not materialize over the last three years. On the bright side, at lease revenue growth seems to be marching northward. Suffice it to say, we don't think the CEO is underpaid!
CEO compensation can have a massive impact on performance, but it's just one element. We've identified 3 warning signs for Anacle Systems that investors should be aware of in a dynamic business environment.
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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