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Is Water Oasis Group Limited's (HKG:1161) CEO Being Overpaid?

Simply Wall St

In 2017 Alan Tam was appointed CEO of Water Oasis Group Limited (HKG:1161). This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. Next, we'll consider growth that the business demonstrates. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This method should give us information to assess how appropriately the company pays the CEO.

See our latest analysis for Water Oasis Group

How Does Alan Tam's Compensation Compare With Similar Sized Companies?

Our data indicates that Water Oasis Group Limited is worth HK$619m, and total annual CEO compensation was reported as HK$4.7m for the year to September 2018. While we always look at total compensation first, we note that the salary component is less, at HK$4.1m. We took a group of companies with market capitalizations below HK$1.6b, and calculated the median CEO total compensation to be HK$1.7m.

It would therefore appear that Water Oasis Group Limited pays Alan Tam 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 better assess whether the pay is overly generous by looking into the underlying business performance.

You can see a visual representation of the CEO compensation at Water Oasis Group, below.

SEHK:1161 CEO Compensation, October 9th 2019

Is Water Oasis Group Limited Growing?

Over the last three years Water Oasis Group Limited has grown its earnings per share (EPS) by an average of 42% per year (using a line of best fit). It achieved revenue growth of 5.6% over the last year.

This shows that the company has improved itself over the last few years. Good news for shareholders. 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 Water Oasis Group Limited Been A Good Investment?

I think that the total shareholder return of 102%, over three years, would leave most Water Oasis Group Limited shareholders smiling. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

In Summary...

We examined the amount Water Oasis Group 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. In addition, shareholders have done well over the same time period. So, considering this good performance, the CEO compensation may be quite appropriate. So you may want to check if insiders are buying Water Oasis Group shares with their own money (free access).

If you want to buy a stock that is better than Water Oasis Group, this free list of high return, low debt companies is a great place to look.

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.

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. Thank you for reading.