Hongren Li became the CEO of Yuanda China Holdings Limited (HKG:2789) in 2017. This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. 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. The aim of all this is to consider the appropriateness of CEO pay levels.
How Does Hongren Li's Compensation Compare With Similar Sized Companies?
At the time of writing, our data says that Yuanda China Holdings Limited has a market cap of HK$559m, and reported total annual CEO compensation of CN¥2.7m for the year to December 2018. It is worth noting that the CEO compensation consists almost entirely of the salary, worth CN¥2.7m. We examined a group of similar sized companies, with market capitalizations of below CN¥1.4b. The median CEO total compensation in that group is CN¥1.5m.
Thus we can conclude that Hongren Li receives more in total compensation than the median of a group of companies in the same market, and of similar size to Yuanda China Holdings Limited. However, this doesn't necessarily mean the pay is too high. A closer look at the performance of the underlying business will give us a better idea about whether the pay is particularly generous.
The graphic below shows how CEO compensation at Yuanda China Holdings has changed from year to year.
Is Yuanda China Holdings Limited Growing?
Over the last three years Yuanda China Holdings Limited has grown its earnings per share (EPS) by an average of 46% per year (using a line of best fit). It saw its revenue drop 25% over the last year.
This shows that the company has improved itself over the last few years. Good news for shareholders. While it would be good to see revenue growth, profits matter more in the end. We don't have analyst forecasts, but you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.
Has Yuanda China Holdings Limited Been A Good Investment?
Since shareholders would have lost about 58% over three years, some Yuanda China Holdings Limited shareholders would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.
We examined the amount Yuanda China Holdings Limited pays its CEO, and compared it to the amount paid by similar sized companies. As discussed above, we discovered that the company pays more than the median of that group.
However we must not forget that the EPS growth has been very strong over three years. On the other hand returns to investors over the same period have probably disappointed many. While EPS is positive, we'd say shareholders would want better returns before the CEO is paid much more. Shareholders may want to check for free if Yuanda 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.
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If you spot an error that warrants correction, please contact the editor at email@example.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.