In 2007 Qizhou Wu was appointed CEO of China Automotive Systems, Inc. (NASDAQ:CAAS). 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 we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This method should give us information to assess how appropriately the company pays the CEO.
How Does Qizhou Wu's Compensation Compare With Similar Sized Companies?
According to our data, China Automotive Systems, Inc. has a market capitalization of US$62m, and pays its CEO total annual compensation worth US$164k. (This is based on the year to December 2018). It is worth noting that the CEO compensation consists almost entirely of the salary, worth US$164k. We examined a group of similar sized companies, with market capitalizations of below US$200m. The median CEO total compensation in that group is US$483k.
A first glance this seems like a real positive for shareholders, since Qizhou Wu is paid less than the average total compensation paid by similar sized companies. Though positive, it's important we delve into the performance of the actual business.
You can see a visual representation of the CEO compensation at China Automotive Systems, below.
Is China Automotive Systems, Inc. Growing?
Over the last three years China Automotive Systems, Inc. has shrunk its earnings per share by an average of 75% per year (measured with a line of best fit). It saw its revenue drop -14% over the last year.
Sadly for shareholders, earnings per share are actually down, over three years. This is compounded by the fact revenue is actually down on last year. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. It could be important to check this free visual depiction of what analysts expect for the future.
Has China Automotive Systems, Inc. Been A Good Investment?
With a three year total loss of 47%, China Automotive Systems, Inc. would certainly have some dissatisfied shareholders. So shareholders would probably think the company shouldn't be too generous with CEO compensation.
It appears that China Automotive Systems, Inc. remunerates its CEO below most similar sized companies.
The compensation paid to Qizhou Wu is lower than is usual at similar sized companies, but the eps growth is lacking, just like the returns (over three years). While one could argue it is appropriate for the CEO to be paid less than other CEOs of similar sized companies, given company performance, we would not call the pay overly generous. Shareholders may want to check for free if China Automotive Systems insiders are buying or selling shares.
Important note: China Automotive Systems may not be the best stock to buy. You might find something better in this list of interesting companies with high ROE and low debt.
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