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James Xia has been the CEO of China Evergrande Group (HKG:3333) since 2007. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at other big companies. Then we'll look at a snap shot of the business growth. 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 James Xia's Compensation Compare With Similar Sized Companies?
Our data indicates that China Evergrande Group is worth HK$300b, and total annual CEO compensation is CN¥298m. (This figure is for the year to December 2017). We think total compensation is more important but we note that the CEO salary is lower, at CN¥280m. We looked at a group of companies with market capitalizations over CN¥55b and the median CEO total compensation was CN¥2.8m. There aren't very many mega-cap companies, so we had to take a wide range to get a meaningful comparison figure.
Thus we can conclude that James Xia receives more in total compensation than the median of a group of large companies in the same market as China Evergrande Group. However, this doesn't necessarily mean the pay is too high. We can better assess whether the pay is overly generous by looking into the underlying business performance.
You can see, below, how CEO compensation at China Evergrande Group has changed over time.
Is China Evergrande Group Growing?
China Evergrande Group has increased its earnings per share (EPS) by an average of 67% a year, over the last three years (using a line of best fit). In the last year, its revenue is up 50%.
This shows that the company has improved itself over the last few years. Good news for shareholders. It's great to see that revenue growth is strong, too. These metrics suggest the business is growing strongly. It could be important to check this free visual depiction of what analysts expect for the future.
Has China Evergrande Group Been A Good Investment?
Boasting a total shareholder return of 413% over three years, China Evergrande Group has done well by shareholders. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.
We compared total CEO remuneration at China Evergrande Group with the amount paid at other large companies. As discussed above, we discovered that the company pays more than the median of that group.
Importantly, though, the company has impressed with its earnings per share growth, over three years. On top of that, in the same period, returns to shareholders have been great. As a result of this good performance, the CEO remuneration may well be quite reasonable. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling China Evergrande Group (free visualization of insider trades).
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.
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 firstname.lastname@example.org. 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.