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How Should Investors React To Matrix Holdings Limited's (HKG:1005) CEO Pay?

Simply Wall St

Chen Qing became the CEO of Matrix Holdings Limited (HKG:1005) in 2008. First, this article will compare CEO compensation with compensation at similar sized companies. Next, we'll consider growth that the business demonstrates. 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 Matrix Holdings

How Does Chen Qing's Compensation Compare With Similar Sized Companies?

According to our data, Matrix Holdings Limited has a market capitalization of HK$2.5b, and paid its CEO total annual compensation worth HK$1.4m over the year to December 2018. Notably, the salary of HK$1.4m is the vast majority of the CEO compensation. We looked at a group of companies with market capitalizations from HK$1.6b to HK$6.2b, and the median CEO total compensation was HK$2.6m.

Most shareholders would consider it a positive that Chen Qing takes less total compensation than the CEOs of most similar size companies, leaving more for shareholders. However, before we heap on the praise, we should delve deeper to understand business performance.

You can see a visual representation of the CEO compensation at Matrix Holdings, below.

SEHK:1005 CEO Compensation, December 30th 2019

Is Matrix Holdings Limited Growing?

On average over the last three years, Matrix Holdings Limited has shrunk earnings per share by 21% each year (measured with a line of best fit). Its revenue is down 4.5% over last year.

Unfortunately, earnings per share have trended lower over the last three years. And the impression is worse when you consider revenue is down year-on-year. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Although we don't have analyst forecasts you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Matrix Holdings Limited Been A Good Investment?

Matrix Holdings Limited has served shareholders reasonably well, with a total return of 14% over three years. But they probably don't want to see the CEO paid more than is normal for companies around the same size.

In Summary...

Matrix Holdings Limited is currently paying its CEO below what is normal for companies of its size.

Chen Qing is remunerated more modestly than is a normal at similar sized companies. However, the earnings per share are not moving in the right direction, and the returns to shareholders could have been better. So while shareholders shouldn't be overly concerned about CEO compensation, we suspect most would prefer see improved performance, before increasing pay. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling Matrix Holdings (free visualization of insider trades).

Important note: Matrix 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.

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.

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. Thank you for reading.