This Is Why Vtech Holdings Limited's (HKG:303) CEO Compensation Looks Appropriate

CEO Allan Wong has done a decent job of delivering relatively good performance at Vtech Holdings Limited (HKG:303) recently. This is something shareholders will keep in mind as they cast their votes on company resolutions such as executive remuneration in the upcoming AGM on 13 July 2021. Based on our analysis of the data below, we think CEO compensation seems reasonable for now.

See our latest analysis for Vtech Holdings

How Does Total Compensation For Allan Wong Compare With Other Companies In The Industry?

According to our data, Vtech Holdings Limited has a market capitalization of HK$20b, and paid its CEO total annual compensation worth US$4.0m over the year to March 2021. Notably, that's an increase of 25% over the year before. 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$16b and HK$50b had a median total CEO compensation of US$4.1m. This suggests that Vtech Holdings remunerates its CEO largely in line with the industry average. Furthermore, Allan Wong directly owns HK$7.0b worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2021	2020	Proportion (2021)
Salary	US$1.1m	US$1.1m	27%
Other	US$2.9m	US$2.1m	73%
Total Compensation	US$4.0m	US$3.2m	100%

On an industry level, around 79% of total compensation represents salary and 21% is other remuneration. 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 past three years, Vtech Holdings Limited has seen its earnings per share (EPS) grow by 3.7% per year. It achieved revenue growth of 9.6% over the last year.

We would argue that the improvement in revenue is good, but isn't particularly impressive, but we're happy with the modest EPS growth. Considering these factors we'd say performance has been pretty decent, though not amazing. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.

Has Vtech Holdings Limited Been A Good Investment?

Vtech Holdings Limited has generated a total shareholder return of 13% over three years, so most shareholders would be reasonably content. But they would probably prefer not to see CEO compensation far in excess of the median.

To Conclude...

Given that the company's overall performance has been reasonable, the CEO remuneration policy might not be shareholders' central point of focus in the upcoming AGM. Despite the pleasing results, we still think that any proposed increases to CEO compensation will be examined based on a case by case basis and linked to performance outcomes.

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 1 warning sign for Vtech Holdings that investors should think about before committing capital to this stock.

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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