Xueqing Shen has been the CEO of Bank of Zhengzhou Co., Ltd. (HKG:6196) since 2012. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. Next, we'll consider growth that the business demonstrates. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. This process should give us an idea about how appropriately the CEO is paid.

Check out our latest analysis for Bank of Zhengzhou

How Does Xueqing Shen's Compensation Compare With Similar Sized Companies?

At the time of writing, our data says that Bank of Zhengzhou Co., Ltd. has a market cap of HK$22b, and reported total annual CEO compensation of CN¥1.8m for the year to December 2019. That's less than last year. While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at CN¥830k. We examined companies with market caps from CN¥14b to CN¥45b, and discovered that the median CEO total compensation of that group was CN¥3.5m.

Pay mix tells us a lot about how a company functions versus the wider industry, and it's no different in the case of Bank of Zhengzhou. On an industry level, roughly 63% of total compensation represents salary and 37% is other remuneration. Bank of Zhengzhou does not set aside a larger portion of remuneration in the form of salary, maintaining the same rate as the wider market.

At first glance this seems like a real positive for shareholders, since Xueqing Shen 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. The graphic below shows how CEO compensation at Bank of Zhengzhou has changed from year to year.

Is Bank of Zhengzhou Co., Ltd. Growing?

On average over the last three years, Bank of Zhengzhou Co., Ltd. has shrunk earnings per share by 23% each year (measured with a line of best fit). In the last year, its revenue is up 6.6%.

Unfortunately, earnings per share have trended lower over the last three years. The modest increase in revenue in the last year isn't enough to make me overlook the disappointing change in earnings per share. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Although we don't have analyst forecasts shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.

Has Bank of Zhengzhou Co., Ltd. Been A Good Investment?

Since shareholders would have lost about 51% over three years, some Bank of Zhengzhou Co., Ltd. shareholders would surely be feeling negative emotions. It therefore might be upsetting for shareholders if the CEO were paid generously.

In Summary...

It looks like Bank of Zhengzhou Co., Ltd. pays its CEO less than similar sized companies.

Shareholders should note that compensation for Xueqing Shen is under the median of a group of similar sized companies. But then, EPS growth is lacking and so are the returns to shareholders. 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. CEO compensation is an important area to keep your eyes on, but we've also identified 5 warning signs for Bank of Zhengzhou (2 are potentially serious!) that you should be aware of before investing here.

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

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.

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. Thank you for reading.