Yao Zhao has been the CEO of Fountain Set (Holdings) Limited (HKG:420) since 2015. This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. 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.
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How Does Yao Zhao's Compensation Compare With Similar Sized Companies?
According to our data, Fountain Set (Holdings) Limited has a market capitalization of HK$1.6b, and pays its CEO total annual compensation worth HK$4.8m. (This number is for the twelve months until December 2017). While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at HK$3.3m. When we examined a selection of companies with market caps ranging from HK$785m to HK$3.1b, we found the median CEO total compensation was HK$1.7m.
Thus we can conclude that Yao Zhao receives more in total compensation than the median of a group of companies in the same market, and of similar size to Fountain Set (Holdings) Limited. However, this doesn't necessarily mean the pay is too high. We can get a better idea of how generous the pay is by looking at the performance of the underlying business.
You can see a visual representation of the CEO compensation at Fountain Set (Holdings), below.
Is Fountain Set (Holdings) Limited Growing?
On average over the last three years, Fountain Set (Holdings) Limited has grown earnings per share (EPS) by 11% each year (using a line of best fit). It achieved revenue growth of 8.6% over the last year.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's also good to see modest revenue growth, suggesting the underlying business is healthy. 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 Fountain Set (Holdings) Limited Been A Good Investment?
I think that the total shareholder return of 86%, over three years, would leave most Fountain Set (Holdings) Limited shareholders smiling. 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.
We compared total CEO remuneration at Fountain Set (Holdings) Limited with the amount paid at companies with a similar market capitalization. We found that it pays well over the median amount paid in the benchmark group.
However we must not forget that the EPS growth has been very strong over three years. On top of that, in the same period, returns to shareholders have been great. So, considering this good performance, the CEO compensation may be quite appropriate. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling Fountain Set (Holdings) (free visualization of insider trades).
If you want to buy a stock that is better than Fountain Set (Holdings), this free list of high return, low debt companies is a great place to look.
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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.