Stock Analysis

Here's Why We Think Neo Telemedia Limited's (HKG:8167) CEO Compensation Looks Fair

SEHK:8167
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The performance at Neo Telemedia Limited (HKG:8167) has been rather lacklustre of late and shareholders may be wondering what CEO Sing Tai Cheung is planning to do about this. One way they can exercise their influence on management is through voting on resolutions, such as executive remuneration at the next AGM, coming up on 13 May 2021. It has been shown that setting appropriate executive remuneration incentivises the management to act in the interests of shareholders. In our opinion, CEO compensation does not look excessive and we discuss why.

View our latest analysis for Neo Telemedia

How Does Total Compensation For Sing Tai Cheung Compare With Other Companies In The Industry?

At the time of writing, our data shows that Neo Telemedia Limited has a market capitalization of HK$1.8b, and reported total annual CEO compensation of HK$1.5m for the year to December 2020. There was no change in the compensation compared to last year. Notably, the salary which is HK$1.19m, represents most of the total compensation being paid.

On comparing similar companies from the same industry with market caps ranging from HK$777m to HK$3.1b, we found that the median CEO total compensation was HK$3.1m. This suggests that Sing Tai Cheung is paid below the industry median.

Component20202019Proportion (2020)
Salary HK$1.2m HK$1.2m 81%
Other HK$276k HK$276k 19%
Total CompensationHK$1.5m HK$1.5m100%

Speaking on an industry level, nearly 76% of total compensation represents salary, while the remainder of 24% is other remuneration. Neo Telemedia is largely mirroring the industry average when it comes to the share a salary enjoys in overall compensation. 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.

ceo-compensation
SEHK:8167 CEO Compensation May 6th 2021

A Look at Neo Telemedia Limited's Growth Numbers

Neo Telemedia Limited has reduced its earnings per share by 72% a year over the last three years. Its revenue is down 43% 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. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Neo Telemedia Limited Been A Good Investment?

With a total shareholder return of 9.0% over three years, Neo Telemedia Limited has done okay by shareholders, but there's always room for improvement. In light of that, investors might probably want to see an improvement on their returns before they feel generous about increasing the CEO remuneration.

In Summary...

Despite the positive returns on shareholders' investments, the fact that earnings have failed to grow makes us skeptical about the stock keeping up its current momentum. Shareholders might want to question the board about these concerns, and revisit their investment thesis for the company.

CEO compensation can have a massive impact on performance, but it's just one element. That's why we did some digging and identified 2 warning signs for Neo Telemedia 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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