Allan Wong has been the CEO of Vtech Holdings Limited (HKG:303) since 2004, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Vtech Holdings.
See our latest analysis for Vtech Holdings
How Does Total Compensation For Allan Wong Compare With Other Companies In The Industry?
At the time of writing, our data shows that Vtech Holdings Limited has a market capitalization of HK$15b, and reported total annual CEO compensation of US$3.2m for the year to March 2020. We note that's an increase of 10% above last year. While we always look at total compensation first, our analysis shows that the salary component is less, at US$1.1m.
For comparison, other companies in the same industry with market capitalizations ranging between HK$7.8b and HK$25b had a median total CEO compensation of US$288k. Hence, we can conclude that Allan Wong is remunerated higher than the industry median. What's more, Allan Wong holds HK$5.4b worth of shares in the company in their own name, indicating that they have a lot of skin in the game.
| Component | 2020 | 2019 | Proportion (2020) |
| Salary | US$1.1m | US$1.1m | 34% |
| Other | US$2.1m | US$1.8m | 66% |
| Total Compensation | US$3.2m | US$2.9m | 100% |
Talking in terms of the industry, salary represented approximately 77% of total compensation out of all the companies we analyzed, while other remuneration made up 23% of the pie. Vtech Holdings sets aside a smaller share of compensation for salary, in comparison to the overall industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.
A Look at Vtech Holdings Limited's Growth Numbers
Over the last three years, Vtech Holdings Limited has shrunk its earnings per share by 2.5% per year. In the last year, its revenue is down 5.1%.
Its a bit disappointing to see that the company has failed to grow its EPS. This is compounded by the fact revenue is actually down on last year. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..
Has Vtech Holdings Limited Been A Good Investment?
Given the total shareholder loss of 31% over three years, many shareholders in Vtech 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 we touched on above, Vtech Holdings 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. Unfortunately, this doesn't look great when you see shareholder returns have been negative over the last three years. To make matters worse, EPS growth has also been negative during this period. Considering such poor performance, we think shareholders might be concerned if the CEO's compensation were to grow.
CEO compensation can have a massive impact on performance, but it's just one element. We did our research and spotted 1 warning sign for Vtech Holdings that investors should look into moving forward.
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:303
Vtech Holdings
Designs, manufactures, and distributes electronic products in Hong Kong, North America, Europe, the Asia Pacific, and internationally.
Flawless balance sheet and good value.
