Why Freetech Road Recycling Technology (Holdings)'s (HKG:6888) CEO Pay Matters

The CEO of Freetech Road Recycling Technology (Holdings) Limited (HKG:6888) is Wai Pan Sze, and this article examines the executive's compensation against the backdrop of overall company performance. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.

See our latest analysis for Freetech Road Recycling Technology (Holdings)

Comparing Freetech Road Recycling Technology (Holdings) Limited's CEO Compensation With the industry

According to our data, Freetech Road Recycling Technology (Holdings) Limited has a market capitalization of HK$150m, and paid its CEO total annual compensation worth HK$3.6m over the year to December 2019. Notably, that's an increase of 63% over the year before. Notably, the salary which is HK$2.94m, represents most of the total compensation being paid.

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$1.7m. Hence, we can conclude that Wai Pan Sze is remunerated higher than the industry median. Furthermore, Wai Pan Sze directly owns HK$74m worth of shares in the company, implying that they are deeply invested in the company's success.

On an industry level, around 60% of total compensation represents salary and 40% is other remuneration. It's interesting to note that Freetech Road Recycling Technology (Holdings) pays out a greater portion of remuneration through salary, compared to the industry. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

Freetech Road Recycling Technology (Holdings) Limited's Growth

Over the last three years, Freetech Road Recycling Technology (Holdings) Limited has shrunk its earnings per share by 39% per year. Its revenue is up 3.5% over the last year.

Few shareholders would be pleased to read that EPS have declined. The modest increase in revenue in the last year isn't enough to make us overlook the disappointing change in EPS. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Freetech Road Recycling Technology (Holdings) Limited Been A Good Investment?

With a three year total loss of 75% for the shareholders, Freetech Road Recycling Technology (Holdings) Limited would certainly have some dissatisfied shareholders. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

In Summary...

As we touched on above, Freetech Road Recycling Technology (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. This doesn't look good against shareholder returns, which have been negative for the past three years. Arguably worse, we've been waiting for positive EPS growth for the last three years. Overall, with such poor performance, shareholder's would probably have questions if the company decided to give the CEO a raise.

CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. That's why we did some digging and identified 2 warning signs for Freetech Road Recycling Technology (Holdings) that you should be aware of before investing.

Switching gears from Freetech Road Recycling Technology (Holdings), if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.

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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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