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Is Oriental Watch Holdings Limited's (HKG:398) CEO Pay Justified?

Simply Wall St

Dennis Yeung is the CEO of Oriental Watch Holdings Limited (HKG:398). This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. After that, we will consider the growth in the business. 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.

See our latest analysis for Oriental Watch Holdings

How Does Dennis Yeung's Compensation Compare With Similar Sized Companies?

Our data indicates that Oriental Watch Holdings Limited is worth HK$850m, and total annual CEO compensation was reported as HK$7.4m for the year to March 2019. While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at HK$3.4m. 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.

As you can see, Dennis Yeung is paid more than the median CEO pay at companies of a similar size, in the same market. However, this does not necessarily mean Oriental Watch 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 a visual representation of the CEO compensation at Oriental Watch Holdings, below.

SEHK:398 CEO Compensation, March 19th 2020

Is Oriental Watch Holdings Limited Growing?

On average over the last three years, Oriental Watch Holdings Limited has grown earnings per share (EPS) by 62% each year (using a line of best fit). It saw its revenue drop 5.5% over the last year.

This shows that the company has improved itself over the last few years. Good news for shareholders. Revenue growth is a real positive for growth, but ultimately profits are more important. We don't have analyst forecasts, but you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.

Has Oriental Watch Holdings Limited Been A Good Investment?

Oriental Watch Holdings Limited has served shareholders reasonably well, with a total return of 22% over three years. But they would probably prefer not to see CEO compensation far in excess of the median.

In Summary...

We compared total CEO remuneration at Oriental Watch Holdings Limited with the amount paid at companies with a similar market capitalization. As discussed above, we discovered that the company pays more than the median of that group.

However we must not forget that the EPS growth has been very strong over three years. Looking at the same time period, we think that the shareholder returns are respectable. So, considering the EPS growth we do not wish to criticize the level of CEO compensation, though we'd recommend further research on management. Shifting gears from CEO pay for a second, we've picked out 2 warning signs for Oriental Watch Holdings that investors should be aware of in a dynamic business environment.

If you want to buy a stock that is better than Oriental Watch Holdings, 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.