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Is Midland Holdings Limited (HKG:1200) Excessively Paying Its CEO?

Simply Wall St

Pierre Wong became the CEO of Midland Holdings Limited (HKG:1200) in 2012. 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. This process should give us an idea about how appropriately the CEO is paid.

See our latest analysis for Midland Holdings

How Does Pierre Wong's Compensation Compare With Similar Sized Companies?

Our data indicates that Midland Holdings Limited is worth HK$718m, and total annual CEO compensation was reported as HK$11m for the year to December 2018. While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at HK$9.2m. 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.

Pay mix tells us a lot about how a company functions versus the wider industry, and it's no different in the case of Midland Holdings. Talking in terms of the sector, salary represented approximately 72% of total compensation out of all the companies we analysed, while other remuneration made up 28% of the pie. Midland Holdings does not set aside a larger portion of remuneration in the form of salary, maintaining the same rate as the wider market.

It would therefore appear that Midland Holdings Limited pays Pierre Wong 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 Midland Holdings has changed over time.

SEHK:1200 CEO Compensation, March 26th 2020

Is Midland Holdings Limited Growing?

Over the last three years Midland Holdings Limited has grown its earnings per share (EPS) by an average of 38% per year (using a line of best fit). It saw its revenue drop 4.0% over the last year.

This shows that the company has improved itself over the last few years. Good news for shareholders. While it would be good to see revenue growth, profits matter more in the end. Shareholders might be interested in this free visualization of analyst forecasts.

Has Midland Holdings Limited Been A Good Investment?

Given the total loss of 54% over three years, many shareholders in Midland Holdings Limited are probably rather dissatisfied, to say the least. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

We examined the amount Midland Holdings Limited pays its CEO, and compared it to the amount paid by 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. 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. Moving away from CEO compensation for the moment, we've identified 5 warning signs for Midland Holdings that you should be aware of before investing.

Important note: Midland 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.