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Is Hailan Holdings Limited (HKG:2278) Overpaying Its CEO?

Simply Wall St

Li Zhou has been the CEO of Hailan Holdings Limited (HKG:2278) since 2017. 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.

View our latest analysis for Hailan Holdings

How Does Li Zhou's Compensation Compare With Similar Sized Companies?

According to our data, Hailan Holdings Limited has a market capitalization of HK$1.3b, and paid its CEO total annual compensation worth CN¥1.3m over the year to December 2018. While we always look at total compensation first, we note that the salary component is less, at CN¥998k. When we examined a selection of companies with market caps ranging from CN¥708m to CN¥2.8b, we found the median CEO total compensation was CN¥2.0m.

Most shareholders would consider it a positive that Li Zhou takes less total compensation than the CEOs of most similar size companies, leaving more for shareholders. However, before we heap on the praise, we should delve deeper to understand business performance.

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

SEHK:2278 CEO Compensation, October 23rd 2019

Is Hailan Holdings Limited Growing?

Hailan Holdings Limited has increased its earnings per share (EPS) by an average of 18% a year, over the last three years (using a line of best fit). It saw its revenue drop 72% over the last year.

This shows that the company has improved itself over the last few years. Good news for shareholders. Revenue growth is a real positive for growth, but ultimately profits are more important. We don't have analyst forecasts, but shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.

Has Hailan Holdings Limited Been A Good Investment?

Hailan Holdings Limited has not done too badly by shareholders, with a total return of 1.2%, over three years. But they probably don't want to see the CEO paid more than is normal for companies around the same size.

In Summary...

Hailan Holdings Limited is currently paying its CEO below what is normal for companies of its size.

Since the business is growing, many would argue this suggests the pay is modest. While some might be keen on seeing higher returns, our short analysis has not produced any evidence to suggest Li Zhou is overcompensated. It's great to see a company that pays its CEO reasonably, even while growing. But for me, it's even better if insiders are also buying shares with their own cold, hard, cash. So you may want to check if insiders are buying Hailan Holdings shares with their own money (free access).

Important note: Hailan Holdings 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 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.