Key Things To Understand About HK Electric Investments and HK Electric Investments' (HKG:2638) CEO Pay Cheque

Chi Tin Wan has been the CEO of HK Electric Investments and HK Electric Investments Limited (HKG:2638) since 2013, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.

Check out our latest analysis for HK Electric Investments and HK Electric Investments

Comparing HK Electric Investments and HK Electric Investments Limited's CEO Compensation With the industry

At the time of writing, our data shows that HK Electric Investments and HK Electric Investments Limited has a market capitalization of HK$70b, and reported total annual CEO compensation of HK$18m for the year to December 2019. That is, the compensation was roughly the same as last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at HK$8.4m.

For comparison, other companies in the same industry with market capitalizations ranging between HK$31b and HK$93b had a median total CEO compensation of HK$6.5m. Hence, we can conclude that Chi Tin Wan is remunerated higher than the industry median.

On an industry level, around 69% of total compensation represents salary and 31% is other remuneration. In HK Electric Investments and HK Electric Investments' case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

A Look at HK Electric Investments and HK Electric Investments Limited's Growth Numbers

Over the last three years, HK Electric Investments and HK Electric Investments Limited has shrunk its earnings per share by 11% per year. It saw its revenue drop 5.6% over the last year.

Few shareholders would be pleased to read that EPS have declined. 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. 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 HK Electric Investments and HK Electric Investments Limited Been A Good Investment?

HK Electric Investments and HK Electric Investments Limited has served shareholders reasonably well, with a total return of 28% over three years. But they probably wouldn't be so happy as to think the CEO should be paid more than is normal, for companies around this size.

In Summary...

As we noted earlier, HK Electric Investments and HK Electric Investments pays its CEO higher than the norm for similar-sized companies belonging to the same industry. Meanwhile, EPS has not been growing sufficiently to impress us, over the last three years. While shareholder returns are acceptable, they don't delight. So you may want to delve deeper, because we don't think the amount Chi Tin makes is justifiable.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. We did our research and spotted 2 warning signs for HK Electric Investments and HK Electric Investments that investors should look into moving forward.

Switching gears from HK Electric Investments and HK Electric Investments, 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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