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Does CITIC Resources Holdings Limited's (HKG:1205) CEO Pay Reflect Performance?

Simply Wall St

Zhengang Suo became the CEO of CITIC Resources Holdings Limited (HKG:1205) in 2015. First, this article will compare CEO compensation with compensation at similar sized companies. Next, we'll consider growth that the business demonstrates. 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.

See our latest analysis for CITIC Resources Holdings

How Does Zhengang Suo's Compensation Compare With Similar Sized Companies?

At the time of writing, our data says that CITIC Resources Holdings Limited has a market cap of HK$3.9b, and reported total annual CEO compensation of HK$13m for the year to December 2018. While we always look at total compensation first, we note that the salary component is less, at HK$4.6m. Importantly, there may be performance hurdles relating to the non-salary component of the total compensation. When we examined a selection of companies with market caps ranging from HK$1.6b to HK$6.3b, we found the median CEO total compensation was HK$2.6m.

As you can see, Zhengang Suo is paid more than the median CEO pay at companies of a similar size, in the same market. However, this does not necessarily mean CITIC Resources Holdings Limited is paying too much. 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 CITIC Resources Holdings has changed from year to year.

SEHK:1205 CEO Compensation, November 18th 2019

Is CITIC Resources Holdings Limited Growing?

CITIC Resources Holdings Limited has increased its earnings per share (EPS) by an average of 109% a year, over the last three years (using a line of best fit). In the last year, its revenue is down 2.5%.

This demonstrates that the company has been improving recently. A good result. The lack of revenue growth isn't ideal, but it is the bottom line that counts most in business. Although we don't have analyst forecasts you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has CITIC Resources Holdings Limited Been A Good Investment?

Given the total loss of 39% over three years, many shareholders in CITIC Resources Holdings Limited are probably rather dissatisfied, to say the least. So shareholders would probably think the company shouldn't be too generous with CEO compensation.

In Summary...

We compared the total CEO remuneration paid by CITIC Resources Holdings Limited, and compared it to remuneration at a group of similar sized companies. We found that it pays well over the median amount paid in the benchmark group.

However, the earnings per share growth over three years is certainly impressive. However, the returns to investors are far less impressive, over the same period. One might thus conclude that it would be better if the company waited until growth is reflected in the share price, before increasing CEO compensation. Whatever your view on compensation, you might want to check if insiders are buying or selling CITIC Resources Holdings shares (free trial).

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.

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 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. Thank you for reading.