Is Hong Kong Shanghai Alliance Holdings Limited's (HKG:1001) CEO Salary Justified?

Simply Wall St

In 2015 Andrew Yao was appointed CEO of Hong Kong Shanghai Alliance Holdings Limited (HKG:1001). First, this article will compare CEO compensation with compensation at similar sized companies. Next, we'll consider growth that the business demonstrates. And finally - as a second measure of performance - we will look at the returns shareholders have received over the last few years. This method should give us information to assess how appropriately the company pays the CEO.

Check out our latest analysis for Hong Kong Shanghai Alliance Holdings

How Does Andrew Yao's Compensation Compare With Similar Sized Companies?

At the time of writing, our data says that Hong Kong Shanghai Alliance Holdings Limited has a market cap of HK$311m, and reported total annual CEO compensation of HK$11m for the year to March 2019. While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at HK$7.2m. 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$1.7m.

Thus we can conclude that Andrew Yao receives more in total compensation than the median of a group of companies in the same market, and of similar size to Hong Kong Shanghai Alliance Holdings Limited. However, this doesn't necessarily mean the pay is too high. We can get a better idea of how generous the pay is by looking at the performance of the underlying business.

You can see, below, how CEO compensation at Hong Kong Shanghai Alliance Holdings has changed over time.

SEHK:1001 CEO Compensation, November 9th 2019

Is Hong Kong Shanghai Alliance Holdings Limited Growing?

On average over the last three years, Hong Kong Shanghai Alliance Holdings Limited has shrunk earnings per share by 84% each year (measured with a line of best fit). Its revenue is down 5.0% 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 you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Hong Kong Shanghai Alliance Holdings Limited Been A Good Investment?

Since shareholders would have lost about 31% over three years, some Hong Kong Shanghai Alliance Holdings Limited shareholders would surely be feeling negative emotions. It therefore might be upsetting for shareholders if the CEO were paid generously.

In Summary...

We compared the total CEO remuneration paid by Hong Kong Shanghai Alliance Holdings Limited, and compared it to remuneration at a group of similar sized companies. Our data suggests that it pays above the median CEO pay within that 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. In our opinion the CEO might be paid too generously! If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at Hong Kong Shanghai Alliance Holdings.

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.

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.