Want to participate in a short research study? Help shape the future of investing tools and you could win a $250 gift card!
Xiao Zhang became the CEO of SORL Auto Parts, Inc. (NASDAQ:SORL) in 2004. First, this article will compare CEO compensation with compensation at similar sized companies. 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. This method should give us information to assess how appropriately the company pays the CEO.
How Does Xiao Zhang’s Compensation Compare With Similar Sized Companies?
Our data indicates that SORL Auto Parts, Inc. is worth US$57m, and total annual CEO compensation is US$60k. (This is based on the year to 2017). Notably, the salary of US$60k is the vast majority of the CEO compensation. We examined a group of similar sized companies, with market capitalizations of below US$200m. The median CEO compensation in that group is US$300k.
Most shareholders would consider it a positive that Xiao Zhang takes less compensation than the CEOs of most similar size companies, leaving more for shareholders. Though positive, it’s important we delve into the performance of the actual business.
The graphic below shows how CEO compensation at SORL Auto Parts has changed from year to year.
Is SORL Auto Parts, Inc. Growing?
On average over the last three years, SORL Auto Parts, Inc. has grown earnings per share (EPS) by 21% each year (using a line of best fit). Its revenue is up 32% over last year.
This demonstrates that the company has been improving recently. A good result. The combination of strong revenue growth with medium-term earnings per share improvement certainly points to the kind of growth I like to see. You might want to check this free visual report on analyst forecasts for future earnings.
Has SORL Auto Parts, Inc. Been A Good Investment?
I think that the total shareholder return of 103%, over three years, would leave most SORL Auto Parts, Inc. 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 appears that SORL Auto Parts, Inc. remunerates its CEO below most similar sized companies. Many would consider this to indicate that the pay is modest since the business is growing. The strong history of shareholder returns might even have some thinking that Xiao Zhang deserves a raise!
Most shareholders like to see a modestly paid CEO combined with strong performance by the company. It would be even more positive if company insiders are buying shares. So you may want to check if insiders are buying SORL Auto Parts shares with their own money (free access).
If you want to buy a stock that is better than SORL Auto Parts, this free list of high return, low debt companies is a great place to look.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at email@example.com.