Does Changmao Biochemical Engineering Company Limited's (HKG:954) CEO Pay Reflect Performance?
The CEO of Changmao Biochemical Engineering Company Limited (HKG:954) is Chun Pan. First, this article will compare CEO compensation with compensation at similar sized companies. 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. The aim of all this is to consider the appropriateness of CEO pay levels.
View our latest analysis for Changmao Biochemical Engineering
How Does Chun Pan's Compensation Compare With Similar Sized Companies?
According to our data, Changmao Biochemical Engineering Company Limited has a market capitalization of HK$450m, and paid its CEO total annual compensation worth CN¥889k over the year to December 2018. While we always look at total compensation first, we note that the salary component is less, at CN¥545k. We looked at a group of companies with market capitalizations under CN¥1.4b, and the median CEO total compensation was CN¥1.6m.
Most shareholders would consider it a positive that Chun Pan takes less total compensation than the CEOs of most similar size companies, leaving more 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 Changmao Biochemical Engineering has changed from year to year.
Is Changmao Biochemical Engineering Company Limited Growing?
Changmao Biochemical Engineering Company Limited has increased its earnings per share (EPS) by an average of 26% a year, over the last three years (using a line of best fit). Its revenue is down 1.0% over last year.
This demonstrates that the company has been improving recently. A good result. Revenue growth is a real positive for growth, but ultimately profits are more important. We don't have analyst forecasts, but you might want to assess this data-rich visualization of earnings, revenue and cash flow.
Has Changmao Biochemical Engineering Company Limited Been A Good Investment?
With a three year total loss of 18%, Changmao Biochemical Engineering Company Limited would certainly have some dissatisfied shareholders. So shareholders would probably think the company shouldn't be too generous with CEO compensation.
In Summary...
It looks like Changmao Biochemical Engineering Company Limited pays its CEO less than similar sized companies.
Many would consider this to indicate that the pay is modest since the business is growing. Few would deny that the total shareholder return over the last three years could have been a lot better. So while we would not say that Chun Pan is generously paid, it would be good to see an improvement in business performance before too an increase in pay. When I see fairly low remuneration, combined with earnings per share growth, but without big share price gains, it makes me want to research the potential for future gains. So you may want to check if insiders are buying Changmao Biochemical Engineering shares with their own money (free access).
If you want to buy a stock that is better than Changmao Biochemical Engineering, this free list of high return, low debt companies is a great place to look.
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