Is Liu Chong Hing Investment Limited's (HKG:194) CEO Paid Enough Relative To Peers?
Lit Chi Liu became the CEO of Liu Chong Hing Investment Limited (HKG:194) in 2014. 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. The aim of all this is to consider the appropriateness of CEO pay levels.
See our latest analysis for Liu Chong Hing Investment
How Does Lit Chi Liu's Compensation Compare With Similar Sized Companies?
Our data indicates that Liu Chong Hing Investment Limited is worth HK$2.7b, and total annual CEO compensation was reported as HK$10m for the year to December 2019. That's a fairly small increase of 2.3% on year before. We think total compensation is more important but we note that the CEO salary is lower, at HK$9.3m. When we examined a selection of companies with market caps ranging from HK$1.6b to HK$6.2b, we found the median CEO total compensation was HK$3.3m.
Pay mix tells us a lot about how a company functions versus the wider industry, and it's no different in the case of Liu Chong Hing Investment. On a sector level, around 68% of total compensation represents salary and 32% is other remuneration. It's interesting to note that Liu Chong Hing Investment pays out a greater portion of remuneration through salary, in comparison to the wider industry.
Thus we can conclude that Lit Chi Liu receives more in total compensation than the median of a group of companies in the same market, and of similar size to Liu Chong Hing Investment Limited. However, this doesn't necessarily mean the pay is too high. We can better assess whether the pay is overly generous by looking into the underlying business performance. You can see, below, how CEO compensation at Liu Chong Hing Investment has changed over time.
Is Liu Chong Hing Investment Limited Growing?
Over the last three years Liu Chong Hing Investment Limited has seen earnings per share (EPS) move in a positive direction by an average of 11% per year (using a line of best fit). Its revenue is down 30% over last year.
This demonstrates that the company has been improving recently. A good result. The lack of revenue growth isn't ideal, but it is the bottom line that counts most in business. Although we don't have analyst forecasts you might want to assess this data-rich visualization of earnings, revenue and cash flow.
Has Liu Chong Hing Investment Limited Been A Good Investment?
Given the total loss of 31% over three years, many shareholders in Liu Chong Hing Investment Limited are probably rather dissatisfied, to say the least. This suggests it would be unwise for the company to pay the CEO too generously.
In Summary...
We compared total CEO remuneration at Liu Chong Hing Investment 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.
Importantly, though, the company has impressed with its earnings per share growth, over three years. However, the returns to investors are far less impressive, over the same period. While EPS is moving in the right direction, we'd say shareholders would want better returns before the CEO is paid much more. Moving away from CEO compensation for the moment, we've identified 3 warning signs for Liu Chong Hing Investment that you should be aware of before investing.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.
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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. Thank you for reading.
