In 2004 Zhi Qiang Chai was appointed CEO of AKM Industrial Company Limited (HKG:1639). 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 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.
How Does Zhi Qiang Chai's Compensation Compare With Similar Sized Companies?
At the time of writing, our data says that AKM Industrial Company Limited has a market cap of HK$1.5b, and reported total annual CEO compensation of HK$1.2m for the year to December 2018. While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at HK$705k. As part of our analysis we looked at companies in the same jurisdiction, with market capitalizations of HK$775m to HK$3.1b. The median total CEO compensation was HK$2.3m.
Pay mix tells us a lot about how a company functions versus the wider industry, and it's no different in the case of AKM Industrial. Talking in terms of the sector, salary represented approximately 77% of total compensation out of all the companies we analysed, while other remuneration made up 23% of the pie. AKM Industrial does not set aside a larger portion of remuneration in the form of salary, maintaining the same rate as the wider market.
Most shareholders would consider it a positive that Zhi Qiang Chai takes less total compensation than the CEOs of most similar size companies, leaving more for shareholders. Though positive, it's important we delve into the performance of the actual business. You can see a visual representation of the CEO compensation at AKM Industrial, below.
Is AKM Industrial Company Limited Growing?
On average over the last three years, AKM Industrial Company Limited has seen earnings per share (EPS) move in a favourable direction by 5.7% each year (using a line of best fit). It achieved revenue growth of 20% 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 we'd stop just short of calling this a top performer, but we think it is well worth watching. 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 AKM Industrial Company Limited Been A Good Investment?
AKM Industrial Company Limited has served shareholders reasonably well, with a total return of 13% over three years. But they probably wouldn't be so happy as to think the CEO should be paid more than is normal, for companies around this size.
AKM Industrial Company Limited is currently paying its CEO below what is normal for companies of its size.
Zhi Qiang Chai receives relatively low remuneration compared to similar sized companies. But the company isn't exactly firing on all cylinders, from my perspective. However I do not find the CEO compensation to be concerning. Shifting gears from CEO pay for a second, we've picked out 1 warning sign for AKM Industrial that investors should be aware of in a dynamic business environment.
Important note: AKM Industrial 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 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.
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