Is CAA Resources Limited’s (HKG:2112) CEO Salary Justified?
Yang Li became the CEO of CAA Resources Limited (HKG:2112) in 2013. This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. After that, we will consider the growth in the business. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This method should give us information to assess how appropriately the company pays the CEO.
View our latest analysis for CAA Resources
How Does Yang Li’s Compensation Compare With Similar Sized Companies?
According to our data, CAA Resources Limited has a market capitalization of HK$2.5b, and pays its CEO total annual compensation worth US$349k. (This number is for the twelve months until December 2017). While we always look at total compensation first, we note that the salary component is less, at US$216k. We looked at a group of companies with market capitalizations from US$200m to US$800m, and the median CEO total compensation was US$247k.
Thus we can conclude that Yang Li receives more in total compensation than the median of a group of companies in the same market, and of similar size to CAA Resources Limited. However, this doesn’t necessarily mean the pay is too high. We can better assess whether the pay is overly generous by looking into the underlying business performance.
The graphic below shows how CEO compensation at CAA Resources has changed from year to year.
Is CAA Resources Limited Growing?
On average over the last three years, CAA Resources Limited has grown earnings per share (EPS) by 25% each year (using a line of best fit). Its revenue is up 8.4% over last year.
This shows that the company has improved itself over the last few years. Good news for shareholders. It’s nice to see a little revenue growth, as this is consistent with healthy business conditions. Although we don’t have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.
Has CAA Resources Limited Been A Good Investment?
With a three year total loss of 17%, CAA Resources Limited would certainly have some dissatisfied shareholders. This suggests it would be unwise for the company to pay the CEO too generously.
In Summary…
We compared total CEO remuneration at CAA Resources Limited with the amount paid at companies with a similar market capitalization. As discussed above, we discovered that the company pays more than the median of that group.
However we must not forget that the EPS growth has been very strong over three years. On the other hand returns to investors over the same period have probably disappointed many. One might thus conclude that it would be better if the company waited until growth is reflected in the share price, before increasing CEO compensation. If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at CAA Resources.
Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies, that have HIGH return on equity and low debt.
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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.
