How Should Investors React To Beijing Enterprises Holdings Limited's (HKG:392) CEO Pay?
Zibo Hou became the CEO of Beijing Enterprises Holdings Limited (HKG:392) in 2017. This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. Then we'll look at a snap shot of the business growth. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. The aim of all this is to consider the appropriateness of CEO pay levels.
Check out our latest analysis for Beijing Enterprises Holdings
How Does Zibo Hou's Compensation Compare With Similar Sized Companies?
Our data indicates that Beijing Enterprises Holdings Limited is worth HK$33b, and total annual CEO compensation was reported as HK$1.8m for the year to December 2019. That's less than last year. It is worth noting that the CEO compensation consists almost entirely of the salary, worth HK$1.8m. As part of our analysis we looked at companies in the same jurisdiction, with market capitalizations of HK$16b to HK$50b. The median total CEO compensation was HK$4.3m.
Next, let's break down remuneration compositions to understand how the industry and company compare with each other. Talking in terms of the sector, salary represented approximately 43% of total compensation out of all the companies we analysed, while other remuneration made up 57% of the pie. On a company level, Beijing Enterprises Holdings prefers to reward its CEO through a salary, opting not to pay Zibo Hou through non-salary benefits.
At first glance this seems like a real positive for shareholders, since Zibo Hou is paid less than the average total compensation paid by similar sized companies. While this is a good thing, you'll need to understand the business better before you can form an opinion. You can see a visual representation of the CEO compensation at Beijing Enterprises Holdings, below.
Is Beijing Enterprises Holdings Limited Growing?
Over the last three years Beijing Enterprises Holdings Limited has seen earnings per share (EPS) move in a positive direction by an average of 9.1% per year (using a line of best fit). The trailing twelve months of revenue was pretty much the same as the prior period.
I'd prefer higher revenue growth, but it is good to see modest EPS growth. So there are some positives here, but not enough to earn high praise. You might want to check this free visual report on analyst forecasts for future earnings.
Has Beijing Enterprises Holdings Limited Been A Good Investment?
Given the total loss of 23% over three years, many shareholders in Beijing Enterprises Holdings Limited are probably rather dissatisfied, to say the least. It therefore might be upsetting for shareholders if the CEO were paid generously.
In Summary...
It looks like Beijing Enterprises Holdings Limited pays its CEO less than similar sized companies.
Zibo Hou is paid less than CEOs of similar size companies, but growth hasn't been particularly impressive and the total shareholder return over three years would leave many disappointed. So while shareholders shouldn't be overly concerned about CEO compensation, they would probably like to see improved shareholder returns before seeing a pay increase. Shifting gears from CEO pay for a second, we've spotted 2 warning signs for Beijing Enterprises Holdings you should be aware of, and 1 of them doesn't sit too well with us.
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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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. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Thank you for reading.
