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Does Xinming China Holdings Limited's (HKG:2699) CEO Pay Compare Well With Peers?

Simply Wall St

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Chengshou Chen has been the CEO of Xinming China Holdings Limited (HKG:2699) since 2014. First, this article will compare CEO compensation with compensation at similar sized companies. After that, we will consider the growth in the business. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. This method should give us information to assess how appropriately the company pays the CEO.

See our latest analysis for Xinming China Holdings

How Does Chengshou Chen's Compensation Compare With Similar Sized Companies?

Our data indicates that Xinming China Holdings Limited is worth HK$2.0b, and total annual CEO compensation is CN¥1.1m. (This is based on the year to December 2018). While we always look at total compensation first, we note that the salary component is less, at CN¥983k. As part of our analysis we looked at companies in the same jurisdiction, with market capitalizations of CN¥687m to CN¥2.7b. The median total CEO compensation was CN¥1.8m.

This would give shareholders a good impression of the company, since most similar size companies have to pay more, leaving less for shareholders. While this is a good thing, you'll need to understand the business better before you can form an opinion.

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

SEHK:2699 CEO Compensation, July 18th 2019

Is Xinming China Holdings Limited Growing?

On average over the last three years, Xinming China Holdings Limited has shrunk earnings per share by 25% each year (measured with a line of best fit). In the last year, its revenue is down -67%.

Unfortunately, earnings per share have trended lower over the last three years. This is compounded by the fact revenue is actually down on last year. 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 shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.

Has Xinming China Holdings Limited Been A Good Investment?

Xinming China Holdings Limited has served shareholders reasonably well, with a total return of 11% 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.

In Summary...

It appears that Xinming China Holdings Limited remunerates its CEO below most similar sized companies.

Shareholders should note that compensation for Chengshou Chen is under the median of a group of similar sized companies. However, the earnings per share are not moving in the right direction, and the returns to shareholders could have been better. We would like to see EPS growth from the business, although we wouldn't say the CEO pay is high. Shareholders may want to check for free if Xinming China Holdings insiders are buying or selling shares.

Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies, that have HIGH return on equity 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 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.