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Is Guangshen Railway Company Limited's (HKG:525) CEO Overpaid Relative To Its Peers?

Simply Wall St

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Lingling Hu became the CEO of Guangshen Railway Company Limited (HKG:525) in 2015. First, this article will compare CEO compensation with compensation at similar sized 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 Guangshen Railway

How Does Lingling Hu's Compensation Compare With Similar Sized Companies?

According to our data, Guangshen Railway Company Limited has a market capitalization of HK$25b, and pays its CEO total annual compensation worth CN¥441k. (This figure is for the year to December 2017). While we always look at total compensation first, we note that the salary component is less, at CN¥273k. We looked at a group of companies with market capitalizations from CN¥14b to CN¥43b, and the median CEO total compensation was CN¥2.5m.

A first glance this seems like a real positive for shareholders, since Lingling Hu is paid less than the average total compensation paid by similar sized companies. 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 Guangshen Railway, below.

SEHK:525 CEO Compensation, May 7th 2019

Is Guangshen Railway Company Limited Growing?

Over the last three years Guangshen Railway Company Limited has shrunk its earnings per share by an average of 11% per year (measured with a line of best fit). Its revenue is up 6.2% over last year.

Sadly for shareholders, earnings per share are actually down, over three years. And the modest revenue growth over 12 months isn't much comfort against the reduced earnings per share. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Shareholders might be interested in this free visualization of analyst forecasts.

Has Guangshen Railway Company Limited Been A Good Investment?

Given the total loss of 21% over three years, many shareholders in Guangshen Railway Company 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...

It looks like Guangshen Railway Company Limited pays its CEO less than similar sized companies.

Shareholders should note that compensation for Lingling Hu is under the median of a group of similar sized companies. But then, EPS growth is lacking and so are the returns to shareholders. We would not call the pay too generous, but nor would we claim the CEO is underpaid, given lacklustre business performance. Shareholders may want to check for free if Guangshen Railway insiders are buying or selling shares.

If you want to buy a stock that is better than Guangshen Railway, this free list of high return, low debt companies is a great place to look.

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.