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In 2008 Jie Han was appointed CEO of China XD Plastics Company Limited (NASDAQ:CXDC). This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. Next, we'll consider growth that the business demonstrates. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This process should give us an idea about how appropriately the CEO is paid.
How Does Jie Han's Compensation Compare With Similar Sized Companies?
According to our data, China XD Plastics Company Limited has a market capitalization of US$122m, and pays its CEO total annual compensation worth US$919k. (This figure is for the year to December 2017). We think total compensation is more important but we note that the CEO salary is lower, at US$533k. We looked at a group of companies with market capitalizations under US$200m, and the median CEO total compensation was US$425k.
Thus we can conclude that Jie Han receives more in total compensation than the median of a group of companies in the same market, and of similar size to China XD Plastics Company Limited. However, this doesn't necessarily mean the pay is too high. We can better assess whether the pay is overly generous by looking into the underlying business performance.
The graphic below shows how CEO compensation at China XD Plastics has changed from year to year.
Is China XD Plastics Company Limited Growing?
China XD Plastics Company Limited has reduced its earnings per share by an average of 25% a year, over the last three years (measured with a line of best fit). In the last year, its revenue is up 9.0%.
Sadly for shareholders, earnings per share are actually down, over three years. The modest increase in revenue in the last year isn't enough to make me overlook the disappointing change in earnings per share. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Although we don't have analyst forecasts, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.
Has China XD Plastics Company Limited Been A Good Investment?
Since shareholders would have lost about 27% over three years, some China XD Plastics Company Limited shareholders would surely be feeling negative emotions. It therefore might be upsetting for shareholders if the CEO were paid generously.
We examined the amount China XD Plastics Company Limited pays its CEO, and compared it to the amount paid by similar sized companies. As discussed above, we discovered that the company pays more than the median of that group.
Neither earnings per share nor revenue have been growing sufficiently fast to impress us, over the last three years.
Just as bad, share price gains for investors have failed to materialize, over the same period. This analysis suggests to us that the CEO is paid too generously! Whatever your view on compensation, you might want to check if insiders are buying or selling China XD Plastics shares (free trial).
Important note: China XD Plastics may not be the best stock to buy. You might find something better in this list of interesting companies with high ROE and low debt.
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.
If you spot an error that warrants correction, please contact the editor at email@example.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. Thank you for reading.