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Is King Fook Holdings Limited's (HKG:280) CEO Overpaid Relative To Its Peers?

Simply Wall St

In 2017 Mei Sum was appointed CEO of King Fook Holdings Limited (HKG:280). 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. The aim of all this is to consider the appropriateness of CEO pay levels.

View our latest analysis for King Fook Holdings

How Does Mei Sum's Compensation Compare With Similar Sized Companies?

Our data indicates that King Fook Holdings Limited is worth HK$270m, and total annual CEO compensation was reported as HK$2.5m for the year to March 2019. Notably, the salary of HK$2.5m is the vast majority of the CEO compensation. We looked at a group of companies with market capitalizations under HK$1.6b, and the median CEO total compensation was HK$1.7m.

It would therefore appear that King Fook Holdings Limited pays Mei Sum more than the median CEO remuneration at companies of a similar size, in the same market. However, this fact alone doesn't mean the remuneration 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, below, how CEO compensation at King Fook Holdings has changed over time.

SEHK:280 CEO Compensation, December 4th 2019

Is King Fook Holdings Limited Growing?

On average over the last three years, King Fook Holdings Limited has grown earnings per share (EPS) by 102% each year (using a line of best fit). Its revenue is up 9.5% over last year.

This demonstrates that the company has been improving recently. A good result. It's also good to see modest revenue growth, suggesting the underlying business is healthy. Although we don't have analyst forecasts you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.

Has King Fook Holdings Limited Been A Good Investment?

Since shareholders would have lost about 52% over three years, some King Fook 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 compared the total CEO remuneration paid by King Fook Holdings Limited, and compared it to remuneration at a group of similar sized companies. We found that it pays well over the median amount paid in the benchmark group.

However we must not forget that the EPS growth has been very strong over three years. Having said that, shareholders may be disappointed with the weak returns over the last three years. 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 King Fook Holdings shares with their own money (free access).

Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies, that have HIGH return on equity 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.