Is Euro Tech Holdings Company Limited (NASDAQ:CLWT) Excessively Paying Its CEO?
T. Leung became the CEO of Euro Tech Holdings Company Limited (NASDAQ:CLWT) in 1996. This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. Then we'll look at a snap shot of the business growth. And finally - as a second measure of performance - we will look at the returns shareholders have received over the last few years. This process should give us an idea about how appropriately the CEO is paid.
See our latest analysis for Euro Tech Holdings
How Does T. Leung's Compensation Compare With Similar Sized Companies?
Our data indicates that Euro Tech Holdings Company Limited is worth US$7.1m, and total annual CEO compensation was reported as US$193k for the year to December 2018. Notably, the salary of US$193k is the vast majority of the CEO compensation. We took a group of companies with market capitalizations below US$200m, and calculated the median CEO total compensation to be US$597k.
Next, let's break down remuneration compositions to understand how the industry and company compare with each other. Speaking on an industry level, we can see that nearly 22% of total compensation represents salary, while the remainder of 78% is other remuneration. At the company level, Euro Tech Holdings pays T. Leung solely through a salary, preferring to go down a conventional route.
At first glance this seems like a real positive for shareholders, since T. Leung is paid less than the average total compensation paid by similar sized companies. Though positive, it's important we delve into the performance of the actual business. You can see a visual representation of the CEO compensation at Euro Tech Holdings, below.
Is Euro Tech Holdings Company Limited Growing?
Euro Tech Holdings Company Limited has reduced its earnings per share by an average of 12% a year, over the last three years (measured with a line of best fit). It achieved revenue growth of 6.9% over the last year.
Few shareholders would be pleased to read that earnings per share are lower over three years. The fairly low revenue growth fails to impress given that the earnings per share is down. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. 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 Euro Tech Holdings Company Limited Been A Good Investment?
Most shareholders would probably be pleased with Euro Tech Holdings Company Limited for providing a total return of 52% over three years. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.
In Summary...
It appears that Euro Tech Holdings Company Limited remunerates its CEO below most similar sized companies.
T. Leung is paid less than CEOs of similar size companies. While the company isn't growing on our analysis, shareholder returns have been good in recent years. We would like to see EPS growth, but in our view it seems the CEO is remunerated reasonably. Looking into other areas, we've picked out 1 warning sign for Euro Tech Holdings that investors should think about before committing capital to this stock.
If you want to buy a stock that is better than Euro Tech Holdings, this free list of high return, low debt companies is a great place to look.
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.
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