How Should Investors Feel About Vision Values Holdings' (HKG:862) CEO Remuneration?

The CEO of Vision Values Holdings Limited (HKG:862) is Simon Lo, 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.

View our latest analysis for Vision Values Holdings

Comparing Vision Values Holdings Limited's CEO Compensation With the industry

Our data indicates that Vision Values Holdings Limited has a market capitalization of HK$1.2b, and total annual CEO compensation was reported as HK$8.6m for the year to June 2020. Notably, that's an increase of 41% over the year before. In particular, the salary of HK$6.00m, 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 HK$1.9m. Hence, we can conclude that Simon Lo is remunerated higher than the industry median. Moreover, Simon Lo also holds HK$368m worth of Vision Values Holdings 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 60% of total compensation out of all the companies we analyzed, while other remuneration made up 40% of the pie. Vision Values Holdings is paying a higher share of its remuneration through a salary in comparison to the overall industry. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

Vision Values Holdings Limited's Growth

Vision Values Holdings Limited has reduced its earnings per share by 52% a year over the last three years. It achieved revenue growth of 20% over the last year.

The decrease in EPS could be a concern for some investors. On the other hand, the strong revenue growth suggests the business is growing. These two metrics are moving in different directions, so while it's hard to be confident judging performance, we think the stock is worth watching. We don't have analyst forecasts, but you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.

Has Vision Values Holdings Limited Been A Good Investment?

Given the total shareholder loss of 51% over three years, many shareholders in Vision Values 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, Simon is compensated more than what is normal for CEOs of companies of similar size, and which belong to the same industry. At the same time, looking at EPS and total shareholder returns, it's tough to say Vision Values Holdings is in a sound position, considering both metrics are down. On a more positive note, the company has produced a more positive revenue growth more recently. Suffice it to say, we don't think the CEO is underpaid!

While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. We did our research and spotted 2 warning signs for Vision Values Holdings that investors should look into moving forward.

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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