This article will reflect on the compensation paid to T. C. Leung who has served as CEO of Euro Tech Holdings Company Limited (NASDAQ:CLWT) since 1996. This analysis will also assess whether Euro Tech Holdings pays its CEO appropriately, considering recent earnings growth and total shareholder returns.
Comparing Euro Tech Holdings Company Limited’s CEO Compensation With the industry
At the time of writing, our data shows that Euro Tech Holdings Company Limited has a market capitalization of US$8.9m, and reported total annual CEO compensation of US$197k for the year to December 2019. That is, the compensation was roughly the same as last year. Notably, the salary of US$197k is the entirety of the CEO compensation.
On comparing similar-sized companies in the industry with market capitalizations below US$200m, we found that the median total CEO compensation was US$719k. Accordingly, Euro Tech Holdings pays its CEO under the industry median. Furthermore, T. C. Leung directly owns US$4.6m worth of shares in the company, implying that they are deeply invested in the company’s success.
Talking in terms of the industry, salary represented approximately 23% of total compensation out of all the companies we analyzed, while other remuneration made up 77% of the pie. At the company level, Euro Tech Holdings pays T. C. Leung solely through a salary, preferring to go down a conventional route. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.
Euro Tech Holdings Company Limited’s Growth
Euro Tech Holdings Company Limited has reduced its earnings per share by 66% a year over the last three years. In the last year, its revenue is down 13%.
Overall this is not a very positive result for shareholders. This is compounded by the fact revenue is actually down on last year. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. 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 Euro Tech Holdings Company Limited Been A Good Investment?
Most shareholders would probably be pleased with Euro Tech Holdings Company Limited for providing a total return of 65% over three years. This strong performance might mean some shareholders don’t mind if the CEO were to be paid more than is normal for a company of its size.
Euro Tech Holdings pays CEO compensation exclusively through a salary, with non-salary compensation completely ignored. As we noted earlier, Euro Tech Holdings pays its CEO lower than the norm for similar-sized companies belonging to the same industry. And although the company is suffering from declining EPS growth over the past three years, shareholder returns remain strong. We would like to see EPS growth, but in our view CEO compensation is modest.
CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. We’ve identified 1 warning sign for Euro Tech Holdings that investors should be aware of in a dynamic business environment.
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.
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. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.