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Is Guangdong Investment Limited's (HKG:270) CEO Overpaid Relative To Its Peers?

Simply Wall St

In 2012 Yinheng Wen was appointed CEO of Guangdong Investment Limited (HKG:270). This report will, first, examine the CEO compensation levels in comparison to CEO compensation at other big companies. Next, we'll consider growth that the business demonstrates. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. This process should give us an idea about how appropriately the CEO is paid.

Check out our latest analysis for Guangdong Investment

How Does Yinheng Wen's Compensation Compare With Similar Sized Companies?

At the time of writing, our data says that Guangdong Investment Limited has a market cap of HK$105b, and reported total annual CEO compensation of HK$3.5m for the year to December 2018. While we always look at total compensation first, we note that the salary component is less, at HK$1.1m. Importantly, there may be performance hurdles relating to the non-salary component of the total compensation. When we examined a group of companies with market caps over HK$62b, we found that their median CEO total compensation was HK$7.7m. There aren't very many mega-cap companies, so we had to take a wide range to get a meaningful comparison figure.

Most shareholders would consider it a positive that Yinheng Wen takes less in total compensation than the CEOs of most other large companies, leaving more 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, below, how CEO compensation at Guangdong Investment has changed over time.

SEHK:270 CEO Compensation, January 11th 2020

Is Guangdong Investment Limited Growing?

On average over the last three years, Guangdong Investment Limited has shrunk earnings per share by 1.3% each year (measured with a line of best fit). In the last year, its revenue is up 13%.

Unfortunately there is a complete lack of earnings per share improvement, over three years. And while it's good to see some good revenue growth recently, the growth isn't really fast enough for me to put aside my concerns around earnings. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. You might want to check this free visual report on analyst forecasts for future earnings.

Has Guangdong Investment Limited Been A Good Investment?

Most shareholders would probably be pleased with Guangdong Investment Limited for providing a total return of 70% over three years. 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.

In Summary...

It looks like Guangdong Investment Limited pays its CEO less than the average at large companies.

Yinheng Wen is paid less than CEOs of other large companies. While the company isn't growing on our analysis, shareholder returns have been good in recent years. We would like to see EPS growth, but in our view it seems the CEO is remunerated reasonably. So you may want to check if insiders are buying Guangdong Investment shares with their own money (free access).

Important note: Guangdong Investment 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 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.

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. Thank you for reading.