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Is Harmonicare Medical Holdings Limited’s (HKG:1509) CEO Overpaid Relative To Its Peers?

Simply Wall St

Yuming Lin has been the CEO of Harmonicare Medical Holdings Limited (HKG:1509) since 2014. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. After that, we will consider the growth in the business. And finally – as a second measure of performance – we will look at the returns shareholders have received over the last few years. This process should give us an idea about how appropriately the CEO is paid.

See our latest analysis for Harmonicare Medical Holdings

How Does Yuming Lin’s Compensation Compare With Similar Sized Companies?

According to our data, Harmonicare Medical Holdings Limited has a market capitalization of HK$1.5b, and pays its CEO total annual compensation worth CN¥519k. (This figure is for the year to December 2017). It is worth noting that the CEO compensation consists almost entirely of the salary, worth CN¥512k. When we examined a selection of companies with market caps ranging from CN¥671m to CN¥2.7b, we found the median CEO total compensation was CN¥1.5m.

Most shareholders would consider it a positive that Yuming Lin takes less total compensation than the CEOs of most similar size companies, leaving more for shareholders. Though positive, it’s important we delve into the performance of the actual business.

The graphic below shows how CEO compensation at Harmonicare Medical Holdings has changed from year to year.

SEHK:1509 CEO Compensation, March 19th 2019

Is Harmonicare Medical Holdings Limited Growing?

On average over the last three years, Harmonicare Medical Holdings Limited has shrunk earnings per share by 55% each year (measured with a line of best fit). Its revenue is up 18% over last year.

Unfortunately, earnings per share have trended lower over the last three years. There’s no doubt that the silver lining is that revenue is up. But it isn’t sufficiently fast growth to overlook the fact that earnings per share has gone backwards over three years. These factors suggest that the business performance wouldn’t really justify a high pay packet for the CEO. It could be important to check this free visual depiction of what analysts expect for the future.

Has Harmonicare Medical Holdings Limited Been A Good Investment?

Since shareholders would have lost about 57% over three years, some Harmonicare Medical Holdings Limited shareholders would surely be feeling negative emotions. It therefore might be upsetting for shareholders if the CEO were paid generously.

In Summary…

It looks like Harmonicare Medical Holdings Limited pays its CEO less than similar sized companies.

The compensation paid to Yuming Lin is lower than is usual at similar sized companies, but the eps growth is lacking, just like the returns (over three years). 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 Harmonicare Medical Holdings insiders are buying or selling shares.

If you want to buy a stock that is better than Harmonicare Medical Holdings, 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.