How Should Investors Feel About CROSSTEC Group Holdings Limited's (HKG:3893) CEO Pay?

Simply Wall St

Sandi Lee has been the CEO of CROSSTEC Group Holdings Limited (HKG:3893) since 2016. This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. Next, we'll consider growth that the business demonstrates. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This method should give us information to assess how appropriately the company pays the CEO.

Check out our latest analysis for CROSSTEC Group Holdings

How Does Sandi Lee's Compensation Compare With Similar Sized Companies?

At the time of writing our data says that CROSSTEC Group Holdings Limited has a market cap of HK$115m, and is paying total annual CEO compensation of HK$5.6m. (This number is for the twelve months until June 2018). Notably, the salary of HK$5.4m is the vast majority of the CEO compensation. We took a group of companies with market capitalizations below HK$1.6b, and calculated the median CEO total compensation to be HK$1.9m.

It would therefore appear that CROSSTEC Group Holdings Limited pays Sandi Lee more than the median CEO remuneration at companies of a similar size, in the same market. However, this fact alone doesn't mean the remuneration 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 a visual representation of the CEO compensation at CROSSTEC Group Holdings, below.

SEHK:3893 CEO Compensation, September 20th 2019

Is CROSSTEC Group Holdings Limited Growing?

On average over the last three years, CROSSTEC Group Holdings Limited has shrunk earnings per share by 84% each year (measured with a line of best fit). It achieved revenue growth of 14% over the last year.

Unfortunately, earnings per share have trended lower over the last three years. There's no doubt that the silver lining is that revenue is up. But it isn't sufficiently fast growth to overlook the fact that earnings per share has gone backwards over three years. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Although we don't have analyst forecasts, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.

Has CROSSTEC Group Holdings Limited Been A Good Investment?

With a three year total loss of 71%, CROSSTEC Group Holdings Limited would certainly have some dissatisfied shareholders. It therefore might be upsetting for shareholders if the CEO were paid generously.

In Summary...

We examined the amount CROSSTEC Group Holdings Limited pays its CEO, and compared it to the amount paid by similar sized companies. Our data suggests that it pays above the median CEO pay within that group.

Earnings per share have not grown in three years, and the revenue growth fails to impress us.

Arguably worse, investors are without a positive return for the last three years. This analysis suggests to us that the CEO is paid too generously! Shareholders may want to check for free if CROSSTEC Group Holdings insiders are buying or selling shares.

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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.