Does Ching Lee Holdings Limited's (HKG:3728) CEO Pay Matter?

Simply Wall St

In 2015 Choi Ng was appointed CEO of Ching Lee Holdings Limited (HKG:3728). First, this article will compare CEO compensation with compensation at similar sized companies. Then we'll look at a snap shot of the business growth. And finally - as a second measure of performance - we will look at the returns shareholders have received over the last few years. This process should give us an idea about how appropriately the CEO is paid.

Check out our latest analysis for Ching Lee Holdings

How Does Choi Ng's Compensation Compare With Similar Sized Companies?

At the time of writing our data says that Ching Lee Holdings Limited has a market cap of HK$237m, and is paying total annual CEO compensation of HK$13m. (This is based on the year to March 2019). That's a notable increase of 59% on last year. While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at HK$3.0m. We examined a group of similar sized companies, with market capitalizations of below HK$1.6b. The median CEO total compensation in that group is HK$1.9m.

As you can see, Choi Ng is paid more than the median CEO pay at companies of a similar size, in the same market. However, this does not necessarily mean Ching Lee Holdings Limited is paying too much. We can better assess whether the pay is overly generous by looking into the underlying business performance.

The graphic below shows how CEO compensation at Ching Lee Holdings has changed from year to year.

SEHK:3728 CEO Compensation, September 20th 2019

Is Ching Lee Holdings Limited Growing?

On average over the last three years, Ching Lee Holdings Limited has shrunk earnings per share by 22% each year (measured with a line of best fit). Its revenue is down -3.1% over last year.

Few shareholders would be pleased to read that earnings per share are lower over three years. And the impression is worse when you consider revenue is down year-on-year. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. We don't have analyst forecasts, but shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.

Has Ching Lee Holdings Limited Been A Good Investment?

With a three year total loss of 39%, Ching Lee Holdings Limited would certainly have some dissatisfied shareholders. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

We compared total CEO remuneration at Ching Lee Holdings Limited with the amount paid at companies with a similar market capitalization. We found that it pays well over the median amount paid in the benchmark group.

We think many shareholders would be underwhelmed with the business growth over the last three years.

Just as bad, share price gains for investors have failed to materialize, over the same period. This contrasts with the growth in CEO remuneration, year on year. In our opinion the CEO might be paid too generously! So you may want to check if insiders are buying Ching Lee Holdings shares with their own money (free access).

Important note: Ching Lee Holdings may not be the best stock to buy. You might find something better in this list of interesting companies with high ROE and low debt.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.