Is CGN Power Co Ltd’s (HKG:1816) CEO Overpaid Relative To Its Peers?
Ligang Gao has been the CEO of CGN Power Co Ltd (HKG:1816) since 2014. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at other big companies. 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 CGN Power
How Does Ligang Gao’s Compensation Compare With Similar Sized Companies?
Our data indicates that CGN Power Co Ltd is worth HK$89b, and total annual CEO compensation is CN¥755k. (This figure is for the year to 2017). We think total compensation is more important but we note that the CEO salary is lower, at CN¥224k. We took a group of companies with market capitalizations over CN¥55b, and calculated the median CEO compensation to be CN¥4.6m. (We took a wide range because the CEOs of massive companies tend to be paid similar amounts – even though some are quite a bit bigger than others).
This would give shareholders a good impression of the company, since most large companies pay more, leaving less for shareholders. However, before we heap on the praise, we should delve deeper to understand business performance.
You can see a visual representation of the CEO compensation at CGN Power, below.
Is CGN Power Co Ltd Growing?
Over the last three years CGN Power Co Ltd has grown its earnings per share (EPS) by an average of 8.0% per year. It achieved revenue growth of 16% over the last year.
I would argue that the modest growth in revenue is a notable positive. And, while modest, the earnings per share growth is noticeable. So while performance isn’t amazing, we think it really does seem quite respectable.
You might want to check this free visual report on analyst forecasts for future earnings.
Has CGN Power Co Ltd Been A Good Investment?
Since shareholders would have lost about 25% over three years, some CGN Power Co Ltd shareholders would surely be feeling negative emotions. So shareholders would probably think the company shouldn’t be too generous with CEO compensation.
In Summary…
It appears that CGN Power Co Ltd remunerates its CEO below most large companies.
It’s well worth noting that while Ligang Gao is paid less than most company leaders (at larger companies), share price performance has been somewhat uninspiring, and total returns have been lacking. So while shareholders shouldn’t be overly concerned about CEO compensation, they would probably like to see improved shareholder returns before seeing a pay increase. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling CGN Power (free visualization of insider trades).
Or you might prefer this data-rich interactive visualization of historic revenue and earnings.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.
