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Should You Worry About GOME Retail Holdings Limited's (HKG:493) CEO Pay Cheque?

Simply Wall St

Jun Wang is the CEO of GOME Retail Holdings Limited (HKG:493). First, this article will compare CEO compensation with compensation at similar sized companies. After that, we will consider the growth in the business. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. The aim of all this is to consider the appropriateness of CEO pay levels.

See our latest analysis for GOME Retail Holdings

How Does Jun Wang's Compensation Compare With Similar Sized Companies?

At the time of writing our data says that GOME Retail Holdings Limited has a market cap of HK$15b, and is paying total annual CEO compensation of CN¥1.2m. (This number is for the twelve months until December 2018). It is worth noting that the CEO compensation consists almost entirely of the salary, worth CN¥1.2m. As part of our analysis we looked at companies in the same jurisdiction, with market capitalizations of CN¥7.1b to CN¥23b. The median total CEO compensation was CN¥4.0m.

A first glance this seems like a real positive for shareholders, since Jun Wang 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, below, how CEO compensation at GOME Retail Holdings has changed over time.

SEHK:493 CEO Compensation, August 25th 2019

Is GOME Retail Holdings Limited Growing?

On average over the last three years, GOME Retail Holdings Limited has shrunk earnings per share by 119% each year (measured with a line of best fit). Its revenue is down -9.9% over last year.

Sadly for shareholders, earnings per share are actually down, over three years. And the impression is worse when you consider revenue is down year-on-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 GOME Retail Holdings Limited Been A Good Investment?

Since shareholders would have lost about 19% over three years, some GOME Retail Holdings Limited shareholders would surely be feeling negative emotions. So shareholders would probably think the company shouldn't be too generous with CEO compensation.

In Summary...

GOME Retail Holdings Limited is currently paying its CEO below what is normal for companies of its size.

Jun Wang is paid less than CEOs of similar size companies, but the company isn't growing and total shareholder returns have been disappointing. 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. If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at GOME Retail Holdings.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.

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.