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Is Crocodile Garments Limited (HKG:122) Excessively Paying Its CEO?

Kin Ming Lam has been the CEO of Crocodile Garments Limited (HKG:122) since 2006. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. 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.

View our latest analysis for Crocodile Garments

How Does Kin Ming Lam’s Compensation Compare With Similar Sized Companies?

At the time of writing our data says that Crocodile Garments Limited has a market cap of HK$644m, and is paying total annual CEO compensation of HK$7.5m. (This is based on the year to 2018). That’s less than last year. While we always look at total compensation first, we note that the salary component is less, at HK$5.7m. We looked at a group of companies with market capitalizations under HK$1.6b, and the median CEO compensation was HK$1.7m.

Thus we can conclude that Kin Ming Lam receives more in total compensation than the median of a group of companies in the same market, and of similar size to Crocodile Garments 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 a visual representation of the CEO compensation at Crocodile Garments, below.

SEHK:122 CEO Compensation December 10th 18

Is Crocodile Garments Limited Growing?

Over the last three years Crocodile Garments Limited has grown its earnings per share (EPS) by an average of 80% per year. Revenue was pretty flat on last year.

This demonstrates that the company has been improving recently. A good result. It’s good to see a bit of revenue growth, as this suggests the business is able to grow sustainably.

We don’t have analyst forecasts, but you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Crocodile Garments Limited Been A Good Investment?

With a three year total loss of 18%, Crocodile Garments Limited would certainly have some dissatisfied shareholders. So shareholders would probably think the company shouldn’t be too generous with CEO compensation.

In Summary…

We compared total CEO remuneration at Crocodile Garments Limited with the amount paid at companies with a similar market capitalization. Our data suggests that it pays above the median CEO pay within that group.

However we must not forget that the EPS growth has been very strong over three years. On the other hand returns to investors over the same period have probably disappointed many. One might thus conclude that it would be better if the company waited until growth is reflected in the share price, before increasing CEO compensation. If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at Crocodile Garments.

Or you might rather take a peek at this analytical visualization of historic cash flow, earnings and revenue.

To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.