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Is Luen Thai Holdings Limited's (HKG:311) CEO Pay Fair?

Simply Wall St

Raymond Tan has been the CEO of Luen Thai Holdings Limited (HKG:311) since 2017. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. Then we'll look at a snap shot of the business growth. 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 Luen Thai Holdings

How Does Raymond Tan's Compensation Compare With Similar Sized Companies?

Our data indicates that Luen Thai Holdings Limited is worth HK$703m, and total annual CEO compensation was reported as US$984k for the year to December 2018. While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at US$467k. We took a group of companies with market capitalizations below US$200m, and calculated the median CEO total compensation to be US$228k.

It would therefore appear that Luen Thai Holdings Limited pays Raymond Tan 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 Luen Thai Holdings, below.

SEHK:311 CEO Compensation, January 18th 2020

Is Luen Thai Holdings Limited Growing?

Luen Thai Holdings Limited has increased its earnings per share (EPS) by an average of 26% a year, over the last three years (using a line of best fit). In the last year, its revenue is up 18%.

This demonstrates that the company has been improving recently. A good result. This sort of respectable year-on-year revenue growth is often seen at a healthy, growing business. We don't have analyst forecasts, but shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.

Has Luen Thai Holdings Limited Been A Good Investment?

Given the total loss of 55% over three years, many shareholders in Luen Thai Holdings Limited are probably rather dissatisfied, to say the least. So shareholders would probably think the company shouldn't be too generous with CEO compensation.

In Summary...

We compared total CEO remuneration at Luen Thai Holdings Limited with the amount paid at companies with a similar market capitalization. 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. While EPS is positive, we'd say shareholders would want better returns before the CEO is paid much more. Shareholders may want to check for free if Luen Thai Holdings insiders are buying or selling shares.

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.