Why Modern Land (China) Co., Limited's (HKG:1107) CEO Pay Matters To You

Simply Wall St

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Peng Zhang has been the CEO of Modern Land (China) Co., Limited (HKG:1107) since 2014. 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 Modern Land (China)

How Does Peng Zhang's Compensation Compare With Similar Sized Companies?

At the time of writing our data says that Modern Land (China) Co., Limited has a market cap of HK$3.4b, and is paying total annual CEO compensation of CN¥3.7m. (This figure is for the year to December 2017). We think total compensation is more important but we note that the CEO salary is lower, at CN¥1.8m. As part of our analysis we looked at companies in the same jurisdiction, with market capitalizations of CN¥1.3b to CN¥5.4b. The median total CEO compensation was CN¥1.7m.

It would therefore appear that Modern Land (China) Co., Limited pays Peng Zhang 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 better assess whether the pay is overly generous by looking into the underlying business performance.

You can see, below, how CEO compensation at Modern Land (China) has changed over time.

SEHK:1107 CEO Compensation, May 7th 2019

Is Modern Land (China) Co., Limited Growing?

On average over the last three years, Modern Land (China) Co., Limited has shrunk earnings per share by 19% each year (measured with a line of best fit). In the last year, its revenue is up 9.8%.

Sadly for shareholders, earnings per share are actually down, over 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. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. It could be important to check this free visual depiction of what analysts expect for the future.

Has Modern Land (China) Co., Limited Been A Good Investment?

Since shareholders would have lost about 2.1% over three years, some Modern Land (China) Co., 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...

We examined the amount Modern Land (China) Co., Limited pays its CEO, and compared it to the amount paid by similar sized companies. We found that it pays well over the median amount paid in the benchmark group.

Earnings per share have not grown in three years, and the revenue growth fails to impress us.

Arguably worse, investors are without a positive return for the last three years. This analysis suggests to us that the CEO is paid too generously! If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at Modern Land (China).

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.

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.