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Is Travel Expert (Asia) Enterprises Limited (HKG:1235) Excessively Paying Its CEO?

Simply Wall St

Hang Fan Cheng has been the CEO of Travel Expert (Asia) Enterprises Limited (HKG:1235) since 2011. This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. 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. The aim of all this is to consider the appropriateness of CEO pay levels.

View our latest analysis for Travel Expert (Asia) Enterprises

How Does Hang Fan Cheng's Compensation Compare With Similar Sized Companies?

Our data indicates that Travel Expert (Asia) Enterprises Limited is worth HK$117m, and total annual CEO compensation was reported as HK$1.1m for the year to March 2019. While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at HK$1.0m. 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.

This would give shareholders a good impression of the company, since most similar size companies have to pay more, leaving less for shareholders. Though positive, it's important we delve into the performance of the actual business.

You can see, below, how CEO compensation at Travel Expert (Asia) Enterprises has changed over time.

SEHK:1235 CEO Compensation, January 16th 2020

Is Travel Expert (Asia) Enterprises Limited Growing?

Travel Expert (Asia) Enterprises Limited has reduced its earnings per share by an average of 110% a year, over the last three years (measured with a line of best fit). Its revenue is down 1.1% over last year.

Sadly for shareholders, earnings per share are actually down, over three years. This is compounded by the fact revenue is actually down on last year. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. 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 Travel Expert (Asia) Enterprises Limited Been A Good Investment?

Since shareholders would have lost about 66% over three years, some Travel Expert (Asia) Enterprises 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...

It appears that Travel Expert (Asia) Enterprises Limited remunerates its CEO below most similar sized companies.

Hang Fan Cheng is paid less than CEOs of similar size companies, but the company isn't growing and total shareholder returns have been disappointing. We would not call the pay too generous, but nor would we claim the CEO is underpaid, given lacklustre business performance. Whatever your view on compensation, you might want to check if insiders are buying or selling Travel Expert (Asia) Enterprises shares (free trial).

If you want to buy a stock that is better than Travel Expert (Asia) Enterprises, this free list of high return, low debt companies is a great place to look.

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.