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Is Churchill China plc's (LON:CHH) CEO Being Overpaid?

Simply Wall St

David O'Connor has been the CEO of Churchill China plc (LON:CHH) since 2014. 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 method should give us information to assess how appropriately the company pays the CEO.

Check out our latest analysis for Churchill China

How Does David O'Connor's Compensation Compare With Similar Sized Companies?

According to our data, Churchill China plc has a market capitalization of UK£218m, and paid its CEO total annual compensation worth UK£617k over the year to December 2018. While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at UK£274k. We examined companies with market caps from UK£77m to UK£306m, and discovered that the median CEO total compensation of that group was UK£459k.

Thus we can conclude that David O'Connor receives more in total compensation than the median of a group of companies in the same market, and of similar size to Churchill China plc. However, this doesn't necessarily mean the pay is too high. A closer look at the performance of the underlying business will give us a better idea about whether the pay is particularly generous.

You can see a visual representation of the CEO compensation at Churchill China, below.

AIM:CHH CEO Compensation, January 26th 2020

Is Churchill China plc Growing?

Over the last three years Churchill China plc has grown its earnings per share (EPS) by an average of 17% per year (using a line of best fit). Its revenue is up 13% over last year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's a real positive to see this sort of growth in a single year. That suggests a healthy and growing business. Shareholders might be interested in this free visualization of analyst forecasts.

Has Churchill China plc Been A Good Investment?

Most shareholders would probably be pleased with Churchill China plc for providing a total return of 131% over three years. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.

In Summary...

We examined the amount Churchill China plc 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.

Importantly, though, the company has impressed with its earnings per share growth, over three years. In addition, shareholders have done well over the same time period. Considering this fine result for shareholders, we daresay the CEO compensation might be apt. So you may want to check if insiders are buying Churchill China shares with their own money (free access).

Important note: Churchill China 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.

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.