How Is EFT Solutions Holdings' (HKG:8062) CEO Compensated?

This article will reflect on the compensation paid to Andrew Lo who has served as CEO of EFT Solutions Holdings Limited (HKG:8062) since 2016. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for EFT Solutions Holdings.

See our latest analysis for EFT Solutions Holdings

How Does Total Compensation For Andrew Lo Compare With Other Companies In The Industry?

According to our data, EFT Solutions Holdings Limited has a market capitalization of HK$134m, and paid its CEO total annual compensation worth HK$1.4m over the year to March 2020. That's a notable decrease of 9.2% on last year. In particular, the salary of HK$960.0k, 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. So it looks like EFT Solutions Holdings compensates Andrew Lo in line with the median for the industry. Moreover, Andrew Lo also holds HK$95m worth of EFT Solutions 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 76% of total compensation out of all the companies we analyzed, while other remuneration made up 24% of the pie. Although there is a difference in how total compensation is set, EFT Solutions Holdings more or less reflects the market in terms of setting the salary. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

EFT Solutions Holdings Limited's Growth

EFT Solutions Holdings Limited has reduced its earnings per share by 9.5% a year over the last three years. Its revenue is down 21% over the previous year.

The decline in EPS is a bit concerning. And the fact that revenue is down year on year arguably paints an ugly picture. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. 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 EFT Solutions Holdings Limited Been A Good Investment?

Since shareholders would have lost about 48% over three years, some EFT Solutions Holdings Limited investors would surely be feeling negative emotions. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

To Conclude...

As previously discussed, Andrew is compensated close to the median for companies of its size, and which belong to the same industry. Meanwhile, EPS growth and shareholder returns have been in the red for the last three years. Considering overall performance, shareholders will likely hold off support for a raise until results improve.

CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. That's why we did our research, and identified 4 warning signs for EFT Solutions Holdings (of which 1 is concerning!) that you should know about in order to have a holistic understanding of the 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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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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