Does Vtech Holdings Limited's (HKG:303) CEO Pay Matter?

Allan Wong has been the CEO of Vtech Holdings Limited (HKG:303) since 2004. 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 - as a second measure of performance - we will look at the returns shareholders have received over the last few years. This method should give us information to assess how appropriately the company pays the CEO.

View our latest analysis for Vtech Holdings

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

At the time of writing, our data says that Vtech Holdings Limited has a market cap of HK$18b, and reported total annual CEO compensation of US$2.9m for the year to March 2019. While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at US$1.1m. Importantly, there may be performance hurdles relating to the non-salary component of the total compensation. When we examined a selection of companies with market caps ranging from US$1.0b to US$3.2b, we found the median CEO total compensation was US$559k.

As you can see, Allan Wong is paid more than the median CEO pay at companies of a similar size, in the same market. However, this does not necessarily mean Vtech Holdings Limited is paying too much. 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 Vtech Holdings has changed over time.

Is Vtech Holdings Limited Growing?

Vtech Holdings Limited has increased its earnings per share (EPS) by an average of 3.0% a year, over the last three years (using a line of best fit). In the last year, its revenue is up 9.0%.

I'd prefer higher revenue growth, but it is good to see modest EPS growth. It's clear the performance has been quite decent, but it it falls short of outstanding,based on this information. You might want to check this free visual report on analyst forecasts for future earnings.

Has Vtech Holdings Limited Been A Good Investment?

Given the total loss of 4.1% over three years, many shareholders in Vtech 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 compared the total CEO remuneration paid by Vtech Holdings Limited, and compared it to remuneration at a group of similar sized companies. We found that it pays well over the median amount paid in the benchmark group.

Over the last three years, shareholder returns have been downright disappointing, and the underlying business has failed to impress us. Shareholders may wish to consider further research. Although we don't think the CEO pay is too high, it is probably more on the generous side of things. Shareholders may want to check for free if Vtech Holdings insiders are buying or selling shares.

Important note: Vtech 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.

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