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Should You Worry About Beijing North Star Company Limited's (HKG:588) CEO Pay?

Simply Wall St

Wei-Dong Li has been the CEO of Beijing North Star Company Limited (HKG:588) since 2016. First, this article will compare CEO compensation with compensation at similar sized companies. Next, we'll consider growth that the business demonstrates. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This process should give us an idea about how appropriately the CEO is paid.

Check out our latest analysis for Beijing North Star

How Does Wei-Dong Li's Compensation Compare With Similar Sized Companies?

At the time of writing our data says that Beijing North Star Company Limited has a market cap of HK$13b, and is paying total annual CEO compensation of CN¥775k. (This is based on the year to December 2018). While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at CN¥665k. We looked at a group of companies with market capitalizations from CN¥6.9b to CN¥22b, and the median CEO total compensation was CN¥3.5m.

This would give shareholders a good impression of the company, since most similar size companies have to pay more, leaving less for shareholders. While this is a good thing, you'll need to understand the business better before you can form an opinion.

The graphic below shows how CEO compensation at Beijing North Star has changed from year to year.

SEHK:588 CEO Compensation, July 31st 2019

Is Beijing North Star Company Limited Growing?

Beijing North Star Company Limited has increased its earnings per share (EPS) by an average of 36% a year, over the last three years (using a line of best fit). In the last year, its revenue is up 51%.

This shows that the company has improved itself over the last few years. Good news for shareholders. It's great to see that revenue growth is strong, too. These metrics suggest the business is growing strongly. We don't have analyst forecasts, but you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.

Has Beijing North Star Company Limited Been A Good Investment?

Boasting a total shareholder return of 40% over three years, Beijing North Star Company Limited has done well by shareholders. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.

In Summary...

Beijing North Star Company Limited is currently paying its CEO below what is normal for companies of its size. Considering the underlying business is growing earnings, this would suggest the pay is modest. The pleasing shareholder returns are the cherry on top; you might even consider that Wei-Dong Li deserves a raise!

It is relatively rare to see a modestly paid CEO when performance is so impressive. It would be even more positive if company insiders are buying shares. So you may want to check if insiders are buying Beijing North Star shares with their own money (free access).

If you want to buy a stock that is better than Beijing North Star, this free list of high return, low debt companies is a great place to look.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.