In 2013 Long Wan was appointed CEO of WH Group Limited (HKG:288). This analysis aims first to contrast CEO compensation with other large companies. 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 Long Wan's Compensation Compare With Similar Sized Companies?
At the time of writing, our data says that WH Group Limited has a market cap of HK$117b, and reported total annual CEO compensation of US$8.0m for the year to December 2018. While we always look at total compensation first, we note that the salary component is less, at US$2.0m. Importantly, there may be performance hurdles relating to the non-salary component of the total compensation. When we examined a group of companies with market caps over US$8.0b, we found that their median CEO total compensation was US$941k. Once you start looking at very large companies, you need to take a broader range, because there simply aren't that many of them.
It would therefore appear that WH Group Limited pays Long Wan more than the median CEO remuneration at large companies, in the same market. However, this fact alone doesn't mean the remuneration is too high. We can better assess whether the pay is overly generous by looking into the underlying business performance.
You can see a visual representation of the CEO compensation at WH Group, below.
Is WH Group Limited Growing?
WH Group Limited has reduced its earnings per share by an average of 5.2% a year, over the last three years (measured with a line of best fit). It saw its revenue drop 1.4% over the last year.
Sadly for shareholders, earnings per share are actually down, over three years. And the fact that revenue is down year on year arguably paints an ugly picture. 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 WH Group Limited Been A Good Investment?
Most shareholders would probably be pleased with WH Group Limited for providing a total return of 49% over three years. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.
We compared the total CEO remuneration paid by WH Group Limited, and compared it to remuneration at a group of other large companies. We found that it pays well over the median amount paid in the benchmark group.
Earnings per share have not grown in three years, and the revenue growth fails to impress us. On the other hand, returns have been good, so the company is doing something right. Given this situation we doubt shareholders are particularly concerned about the CEO compensation. So you may want to check if insiders are buying WH Group shares with their own money (free access).
Important note: WH Group 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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