Why Hi-Level Technology Holdings Limited’s (HKG:8113) CEO Salary Matters To You

Benson Chang took the helm as Hi-Level Technology Holdings Limited’s (HKG:8113) CEO and grew market cap to HK$389.09m recently.
Understanding how CEOs are incentivised to run and grow their company is an important aspect of investing in a stock.
This is because, if incentives are aligned, more value is created for shareholders which directly impacts your returns as an investor.
Today we will assess
Chang’s pay and compare this to the company’s performance over the same period, as well as measure it against other
SEHK-listed
CEOs leading companies of similar size and profitability.


See our latest analysis for Hi-Level Technology Holdings

What has been the trend in 8113’s earnings?

8113 can create value to shareholders by increasing its profitability, which in turn is reflected into the share price and the investor’s ability to sell their shares at higher capital gains.
Recently,
8113
produced
a profit
of HK$37.44m
, which is an increase of 11.73% from its
previous
year’s earnings of HK$33.51m.
This is an encouraging signal that 8113 aims to sustain a strong track record of generating profits regardless of the challenges.
As profits are moving up and up,
CEO pay should
echo
Chang’s
valued-adding activities.
Over the same period
Chang’s total
compensation
declined
by a
trivial
-3.63%, to HK$1.33m.
Furthermore,
Chang’s pay is also made up of 0.45% non-cash elements, which means that
variabilities
in 8113’s share price can
affect
the
actual
level of what the CEO actually
takes home at the end of the day.


SEHK:8113 Past Future Earnings July 12th 18
SEHK:8113 Past Future Earnings July 12th 18

Is 8113’s CEO overpaid relative to the market?

Even though
there is no cookie-cutter approach,
since
remuneration
should account for specific factors of the
company and market,
we can
gauge
a high-level
yardstick
to see if 8113
is an outlier.
This outcome
can help shareholders ask
the right question about Chang’s incentive alignment.
Normally,
a SEHK small-cap
has a value of
HK$2.61B,
creates
earnings of HK$245M, and
pays
its CEO
circa
HK$3.3M
per year.
Allowing for
8113’s size and performance, in terms of market cap and earnings,
it appears that
Chang is
being paid well below
other SEHK CEOs of small-caps, on average.

Next Steps:

Hopefully this article has given you insight on how shareholders should think about 8113’s governance policies such as CEO pay. As an investor, you have the right to understand how the board thinks about management incentives, and also the right to vote for and against substantial CEO pay changes. Governance is a big factor in investing, and I encourage you to dig deeper into those that represent your voice on the board.
If you have not done so already, I
urge
you to complete your research by taking a look at the following:

  1. Governance: To find out more about 8113’s governance, look through our infographic report of the company’s board and management.
  2. Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
  3. Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of 8113? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!

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This post was originally published here via Google News