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Is Beijing Jingcheng Machinery Electric Company Limited's (HKG:187) CEO Being Overpaid?

Simply Wall St

Junjie Li has been the CEO of Beijing Jingcheng Machinery Electric Company Limited (HKG:187) since 2017. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. Next, we'll consider growth that the business demonstrates. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. This process should give us an idea about how appropriately the CEO is paid.

View our latest analysis for Beijing Jingcheng Machinery Electric

How Does Junjie Li's Compensation Compare With Similar Sized Companies?

According to our data, Beijing Jingcheng Machinery Electric Company Limited has a market capitalization of HK$1.7b, and paid its CEO total annual compensation worth CN¥577k over the year to December 2018. We think total compensation is more important but we note that the CEO salary is lower, at CN¥220k. Importantly, there may be performance hurdles relating to the non-salary component of the total compensation. We looked at a group of companies with market capitalizations from CN¥697m to CN¥2.8b, and the median CEO total compensation was CN¥1.9m.

Most shareholders would consider it a positive that Junjie Li takes less total compensation than the CEOs of most similar size companies, leaving more for shareholders. However, before we heap on the praise, we should delve deeper to understand business performance.

The graphic below shows how CEO compensation at Beijing Jingcheng Machinery Electric has changed from year to year.

SEHK:187 CEO Compensation, February 7th 2020

Is Beijing Jingcheng Machinery Electric Company Limited Growing?

Over the last three years Beijing Jingcheng Machinery Electric Company Limited has grown its earnings per share (EPS) by an average of 30% per year (using a line of best fit). Its revenue is up 11% over last year.

This demonstrates that the company has been improving recently. A good result. It's also good to see decent revenue growth in the last year, suggesting the business is healthy and growing. Although we don't have analyst forecasts shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.

Has Beijing Jingcheng Machinery Electric Company Limited Been A Good Investment?

Given the total loss of 59% over three years, many shareholders in Beijing Jingcheng Machinery Electric Company Limited are probably rather dissatisfied, to say the least. So shareholders would probably think the company shouldn't be too generous with CEO compensation.

In Summary...

Beijing Jingcheng Machinery Electric Company Limited is currently paying its CEO below what is normal for companies of its size.

Since the business is growing, many would argue this suggests the pay is modest. Unfortunately, some shareholders may be disappointed with their returns, given the company's performance over the last three years. So while we would not say that Junjie Li is generously paid, it would be good to see an improvement in business performance before too an increase in pay. In this case we may want to look deeper into the company. There are some real positives and we could see improved returns in the longer term. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling Beijing Jingcheng Machinery Electric (free visualization of insider trades).

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.

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.