What Can We Learn About Anacle Systems' (HKG:8353) CEO Compensation?

This article will reflect on the compensation paid to Alex Lau who has served as CEO of Anacle Systems Limited (HKG:8353) since 2006. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Anacle Systems.

Check out our latest analysis for Anacle Systems

Comparing Anacle Systems Limited's CEO Compensation With the industry

At the time of writing, our data shows that Anacle Systems Limited has a market capitalization of HK$80m, and reported total annual CEO compensation of S$312k for the year to May 2020. We note that's an increase of 13% above last year. Notably, the salary which is S$295.8k, represents most of the total compensation being paid.

For comparison, other companies in the industry with market capitalizations below HK$1.6b, reported a median total CEO compensation of S$184k. Accordingly, our analysis reveals that Anacle Systems Limited pays Alex Lau north of the industry median. Moreover, Alex Lau also holds HK$9.1m worth of Anacle Systems stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Talking in terms of the industry, salary represented approximately 82% of total compensation out of all the companies we analyzed, while other remuneration made up 18% of the pie. 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.

A Look at Anacle Systems Limited's Growth Numbers

Over the last three years, Anacle Systems Limited has shrunk its earnings per share by 31% per year. It achieved revenue growth of 42% over the last year.

The reduction in EPS, over three years, is arguably concerning. But in contrast the revenue growth is strong, suggesting future potential for EPS growth. In conclusion we can't form a strong opinion about business performance yet; but it's one worth watching. 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 Anacle Systems Limited Been A Good Investment?

Given the total shareholder loss of 67% over three years, many shareholders in Anacle Systems Limited are probably rather dissatisfied, to say the least. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

As we touched on above, Anacle Systems Limited is currently paying its CEO higher than the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. It concerns us that EPS growth for the company is negative, while share price gains did not materialize over the last three years. On a more positive note, the company has produced a more positive revenue growth more recently. Most would consider it prudent for the company to hold off any CEO pay rise until performance improves.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. We did our research and spotted 3 warning signs for Anacle Systems that investors should look into moving forward.

Switching gears from Anacle Systems, 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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