Is Solartech International Holdings Limited's (HKG:1166) CEO Overpaid Relative To Its Peers?
Lai Him Chau is the CEO of Solartech International Holdings Limited (HKG:1166). This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. After that, we will consider the growth in the business. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. This process should give us an idea about how appropriately the CEO is paid.
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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$142m, and total annual CEO compensation is HK$6.9m. (This is based on the year to June 2018). Notably, the salary of HK$6.9m is the vast majority of the CEO compensation. 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$1.5m.
Thus we can conclude that Lai Him Chau receives more in total compensation than the median of a group of companies in the same market, and of similar size to Solartech International Holdings 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 a visual representation of the CEO compensation at Solartech International Holdings, below.
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 90% per year (using a line of best fit). Its revenue is down -8.0% over last year.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. The lack of revenue growth isn't ideal, but it is the bottom line that counts most in business. We don't have analyst forecasts, but you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.
Has Solartech International Holdings Limited Been A Good Investment?
Since shareholders would have lost about 80% over three years, some Solartech International Holdings Limited shareholders would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.
In Summary...
We examined the amount Solartech International Holdings Limited pays its CEO, and compared it to the amount paid by similar sized companies. As discussed above, we discovered that the company pays more than the median of that 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. Considering the per share profit growth, but keeping in mind the weak returns, we'd need more time to form a view on CEO compensation. So you may want to check if insiders are buying Solartech International Holdings shares with their own money (free access).
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.
