How Much Is Frontier Services Group's (HKG:500) CEO Getting Paid?

Dongyi Hua became the CEO of Frontier Services Group Limited (HKG:500) in 2017, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Frontier Services Group.

See our latest analysis for Frontier Services Group

Comparing Frontier Services Group Limited's CEO Compensation With the industry

According to our data, Frontier Services Group Limited has a market capitalization of HK$1.1b, and paid its CEO total annual compensation worth HK$21m over the year to December 2019. That's a modest increase of 6.1% on the prior year. While we always look at total compensation first, our analysis shows that the salary component is less, at HK$5.9m.

On comparing similar-sized companies in the industry with market capitalizations below HK$1.6b, we found that the median total CEO compensation was HK$1.2m. Accordingly, our analysis reveals that Frontier Services Group Limited pays Dongyi Hua north of the industry median.

On an industry level, around 70% of total compensation represents salary and 30% is other remuneration. Frontier Services Group 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 Frontier Services Group Limited's Growth Numbers

Over the past three years, Frontier Services Group Limited has seen its earnings per share (EPS) grow by 3.1% per year. In the last year, its revenue is down 25%.

We would prefer it if there was revenue growth, but it is good to see a modest EPS growth at least. 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. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Frontier Services Group Limited Been A Good Investment?

With a three year total loss of 66% for the shareholders, Frontier Services Group Limited would certainly have some dissatisfied shareholders. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

As we noted earlier, Frontier Services Group pays its CEO higher than the norm for similar-sized companies belonging to the same industry. Over the last three years, shareholder returns have been downright disappointing for Frontier Services Group, and although EPS growth is steady, it hasn't set the world on fire. This doesn't look good when you see that Dongyi is earning more than the industry median. Taking all this into account, it could be hard to get shareholder support for giving Dongyi a raise.

CEO pay is simply one of the many factors that need to be considered while examining business performance. We did our research and identified 4 warning signs (and 2 which are a bit unpleasant) in Frontier Services Group we think you should know about.

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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