Is Solartech International Holdings Limited's (HKG:1166) CEO Pay Justified?
The CEO of Solartech International Holdings Limited (HKG:1166) is Lai Him Chau. First, this article will compare CEO compensation with compensation at similar sized companies. After that, we will consider the growth in the business. And finally - as a second measure of performance - we will look at the returns shareholders have received over the last few years. The aim of all this is to consider the appropriateness of CEO pay levels.
See our latest analysis for Solartech International Holdings
How Does Lai Him Chau's Compensation Compare With Similar Sized Companies?
Our data indicates that Solartech International Holdings Limited is worth HK$140m, and total annual CEO compensation was reported as HK$7.9m for the year to June 2019. Notably, that's an increase of 14% over the year before. While we always look at total compensation first, we note that the salary component is less, at HK$6.7m. 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.
As you can see, Lai Him Chau is paid more than the median CEO pay at companies of a similar size, in the same market. However, this does not necessarily mean Solartech International Holdings Limited is paying too much. We can get a better idea of how generous the pay is by looking at the performance of the underlying business.
The graphic below shows how CEO compensation at Solartech International Holdings has changed from year to year.
Is Solartech International Holdings Limited Growing?
Over the last three years Solartech International Holdings Limited has grown its earnings per share (EPS) by an average of 27% per year (using a line of best fit). Its revenue is down 20% over last year.
This shows that the company has improved itself over the last few years. Good news for shareholders. Revenue growth is a real positive for growth, but ultimately profits are more important. Although we don't have analyst forecasts you might want to assess this data-rich visualization of earnings, revenue and cash flow.
Has Solartech International Holdings Limited Been A Good Investment?
With a three year total loss of 86%, Solartech International 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 Solartech International 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.
However, the earnings per share growth over three years is certainly impressive. On the other hand returns to investors over the same period have probably disappointed many. This contrasts with the growth in CEO remuneration, in the last year. While EPS is positive, we'd say shareholders would want better returns before the CEO is paid much more. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling Solartech International Holdings (free visualization of insider trades).
Important note: Solartech International 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.
