Chun Pan is the CEO of Changmao Biochemical Engineering Company Limited (HKG:954). This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. 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 Chun Pan's Compensation Compare With Similar Sized Companies?
Our data indicates that Changmao Biochemical Engineering Company Limited is worth HK$471m, and total annual CEO compensation is CN¥1.1m. (This figure is for the year to December 2018). We note that's an increase of 59% above last year. While we always look at total compensation first, we note that the salary component is less, at CN¥545k. We took a group of companies with market capitalizations below CN¥1.3b, and calculated the median CEO total compensation to be CN¥1.3m.
So Chun Pan receives a similar amount to the median CEO pay, amongst the companies we looked at. Although this fact alone doesn't tell us a great deal, it becomes more relevant when considered against the business performance.
You can see a visual representation of the CEO compensation at Changmao Biochemical Engineering, below.
Is Changmao Biochemical Engineering Company Limited Growing?
On average over the last three years, Changmao Biochemical Engineering Company Limited has shrunk earnings per share by 26% each year (measured with a line of best fit). Its revenue is up 1.3% over last year.
Sadly for shareholders, earnings per share are actually down, over three years. The fairly low revenue growth fails to impress given that the earnings per share is down. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. We don't have analyst forecasts, but shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.
Has Changmao Biochemical Engineering Company Limited Been A Good Investment?
Since shareholders would have lost about 16% over three years, some Changmao Biochemical Engineering Company Limited shareholders would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.
Chun Pan is paid around what is normal the leaders of comparable size companies.
Returns have been disappointing and the company is not growing its earnings per share. This doesn't look great when you consider CEO remuneration is up on last year. Few would argue that it's wise for the company to pay any more, before returns improve. If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at Changmao Biochemical Engineering.
Important note: Changmao Biochemical Engineering 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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