Is Haitong International Securities Group Limited's (HKG:665) CEO Being Overpaid?

Yong Lin has been the CEO of Haitong International Securities Group Limited (HKG:665) since 2011. First, this article will compare CEO compensation with compensation at similar sized companies. Next, we'll consider growth that the business demonstrates. And finally - as a second measure of performance - we will look at the returns shareholders have received over the last few years. The aim of all this is to consider the appropriateness of CEO pay levels.

See our latest analysis for Haitong International Securities Group

How Does Yong Lin's Compensation Compare With Similar Sized Companies?

According to our data, Haitong International Securities Group Limited has a market capitalization of HK$12b, and paid its CEO total annual compensation worth HK$21m over the year to December 2018. We think total compensation is more important but we note that the CEO salary is lower, at HK$4.2m. Importantly, there may be performance hurdles relating to the non-salary component of the total compensation. We examined companies with market caps from HK$7.8b to HK$25b, and discovered that the median CEO total compensation of that group was HK$3.9m.

Pay mix tells us a lot about how a company functions versus the wider industry, and it's no different in the case of Haitong International Securities Group. On an industry level, roughly 74% of total compensation represents salary and 26% is other remuneration. Haitong International Securities Group sets aside a smaller share of compensation for salary, in comparison to the overall industry.

It would therefore appear that Haitong International Securities Group Limited pays Yong Lin more than the median CEO remuneration at companies of a similar size, in the same market. However, this fact alone doesn't mean the remuneration is too high. We can get a better idea of how generous the pay is by looking at the performance of the underlying business. The graphic below shows how CEO compensation at Haitong International Securities Group has changed from year to year.

Is Haitong International Securities Group Limited Growing?

Haitong International Securities Group Limited has reduced its earnings per share by an average of 20% a year, over the last three years (measured with a line of best fit). It achieved revenue growth of 26% over the last year.

Investors should note that, over three years, earnings per share are down. But on the other hand, revenue growth is strong, suggesting a brighter future. It's hard to reach a conclusion about business performance right now. This may be one to watch. It could be important to check this free visual depiction of what analysts expect for the future.

Has Haitong International Securities Group Limited Been A Good Investment?

Since shareholders would have lost about 49% over three years, some Haitong International Securities Group Limited shareholders would surely be feeling negative emotions. It therefore might be upsetting for shareholders if the CEO were paid generously.

In Summary...

We examined the amount Haitong International Securities Group Limited pays its CEO, and compared it to the amount paid by similar sized companies. Our data suggests that it pays above the median CEO pay within that group.

While we have not been overly impressed by the business performance, the shareholder returns, over three years, have been disappointing. Although we'd stop short of calling it inappropriate, we think the CEO compensation is probably more on the generous side of things. Looking into other areas, we've picked out 3 warning signs for Haitong International Securities Group that investors should think about before committing capital to this stock.

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.

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.

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