In 2007, Edwin Lun was appointed CEO of Mexan Limited (HKG:22). 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. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This process should give us an idea about how appropriately the CEO is paid.
How Does Edwin Lun's Compensation Compare With Similar Sized Companies?
Our data indicates that Mexan Limited is worth HK$226m, and total annual CEO compensation was reported as HK$602k for the year to March 2019. We took a group of companies with market capitalizations below HK$1.6b, and calculated the median CEO total compensation to be HK$1.8m.
Next, let's break down remuneration compositions to understand how the industry and company compare with each other. Talking in terms of the sector, salary represented approximately 83% of total compensation out of all the companies we analysed, while other remuneration made up 17% of the pie. Speaking on a company level, Mexan does not pay a salary to Edwin Lun, preferring to remunerate the executive through non-salary compensation.
Most shareholders would consider it a positive that Edwin Lun 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, below, how CEO compensation at Mexan has changed over time.
Is Mexan Limited Growing?
Mexan Limited has reduced its earnings per share by an average of 69% a year, over the last three years (measured with a line of best fit). Its revenue is up 6.4% over last year.
Sadly for shareholders, earnings per share are actually down, over three years. The modest increase in revenue in the last year isn't enough to make me overlook the disappointing change in earnings per share. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. We don't have analyst forecasts, but shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.
Has Mexan Limited Been A Good Investment?
Given the total loss of 65% over three years, many shareholders in Mexan Limited are probably rather dissatisfied, to say the least. It therefore might be upsetting for shareholders if the CEO were paid generously.
Mexan Limited is currently paying its CEO below what is normal for companies of its size.
The compensation paid to Edwin Lun is lower than is usual at similar sized companies, but the eps growth is lacking, just like the returns (over three years). Considering all these factors, we'd stop short of saying the CEO pay is too high, but we don't think shareholders would want to see a pay rise before business performance improves. Shifting gears from CEO pay for a second, we've spotted 4 warning signs for Mexan you should be aware of, and 1 of them is a bit unpleasant.
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 firstname.lastname@example.org. 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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