Yang Li became the CEO of CAA Resources Limited (HKG:2112) in 2013. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. After that, we will consider the growth in the business. And finally - as a second measure of performance - we will look at the returns shareholders have received over the last few years. The aim of all this is to consider the appropriateness of CEO pay levels.
How Does Yang Li's Compensation Compare With Similar Sized Companies?
Our data indicates that CAA Resources Limited is worth HK$675m, and total annual CEO compensation is US$584k. (This number is for the twelve months until December 2018). While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at US$101k. We examined a group of similar sized companies, with market capitalizations of below US$200m. The median CEO total compensation in that group is US$248k.
Thus we can conclude that Yang Li receives more in total compensation than the median of a group of companies in the same market, and of similar size to CAA Resources 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.
The graphic below shows how CEO compensation at CAA Resources has changed from year to year.
Is CAA Resources Limited Growing?
CAA Resources Limited has reduced its earnings per share by an average of 3.3% a year, over the last three years (measured with a line of best fit). In the last year, its revenue is up 13%.
Sadly for shareholders, earnings per share are actually down, over three years. There's no doubt that the silver lining is that revenue is up. But it isn't sufficiently fast growth to overlook the fact that earnings per share has gone backwards over three years. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. We don't have analyst forecasts, but you might want to assess this data-rich visualization of earnings, revenue and cash flow.
Has CAA Resources Limited Been A Good Investment?
Given the total loss of 74% over three years, many shareholders in CAA Resources Limited are probably rather dissatisfied, to say the least. So shareholders would probably think the company shouldn't be too generous with CEO compensation.
We examined the amount CAA Resources 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.
We think many shareholders would be underwhelmed with the business growth over the last three years.
Over the same period, investors would have come away with nothing in the way of share price gains. In our opinion the CEO might be paid too generously! Shareholders may want to check for free if CAA Resources insiders are buying or selling shares.
Important note: CAA Resources 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 firstname.lastname@example.org. 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.