In 2013 Andy Zheng was appointed CEO of Huaxi Holdings Company Limited (HKG:1689). First, this article will compare CEO compensation with compensation at similar sized companies. Then we'll look at a snap shot of the business growth. And finally - as a second measure of performance - we will look at the returns shareholders have received over the last few years. This method should give us information to assess how appropriately the company pays the CEO.
How Does Andy Zheng's Compensation Compare With Similar Sized Companies?
According to our data, Huaxi Holdings Company Limited has a market capitalization of HK$1.4b, and paid its CEO total annual compensation worth HK$622k over the year to March 2019. While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at HK$104k. We note that more than half of the total compensation is not the salary; and performance requirements may apply to this non-salary portion. When we examined a selection of companies with market caps ranging from HK$776m to HK$3.1b, we found the median CEO total compensation was HK$2.3m.
This would give shareholders a good impression of the company, since most similar size companies have to pay more, leaving less for shareholders. Though positive, it's important we delve into the performance of the actual business.
You can see, below, how CEO compensation at Huaxi Holdings has changed over time.
Is Huaxi Holdings Company Limited Growing?
Over the last three years Huaxi Holdings Company Limited has grown its earnings per share (EPS) by an average of 18% per year (using a line of best fit). In the last year, its revenue is up 57%.
This shows that the company has improved itself over the last few years. Good news for shareholders. The combination of strong revenue growth with medium-term earnings per share improvement certainly points to the kind of growth I like to see. We don't have analyst forecasts, but shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.
Has Huaxi Holdings Company Limited Been A Good Investment?
I think that the total shareholder return of 38%, over three years, would leave most Huaxi Holdings Company Limited shareholders smiling. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.
It looks like Huaxi Holdings Company Limited pays its CEO less than similar sized companies.
Many would consider this to indicate that the pay is modest since the business is growing. The pleasing shareholder returns are the cherry on top; you might even consider that Andy Zheng deserves a raise! It's not often we see shareholders do so well, and yet the CEO is paid modestly. It would be even more positive if company insiders are buying shares. Shifting gears from CEO pay for a second, we've spotted 3 warning signs for Huaxi Holdings you should be aware of, and 1 of them is concerning.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.
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