Is Xinyi Solar Holdings Limited (HKG:968) Excessively Paying Its CEO?

Yau Ching Lee became the CEO of Xinyi Solar Holdings Limited (HKG:968) in 2010. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. Then we’ll look at a snap shot of the business growth. Third, we’ll reflect on the total return to shareholders over three years, as a second measure of business performance. This method should give us information to assess how appropriately the company pays the CEO.

Check out our latest analysis for Xinyi Solar Holdings

How Does Yau Ching Lee’s Compensation Compare With Similar Sized Companies?

Our data indicates that Xinyi Solar Holdings Limited is worth HK$44b, and total annual CEO compensation was reported as HK$18m for the year to December 2018. We think total compensation is more important but we note that the CEO salary is lower, at . We further remind readers that the CEO may face performance requirements to receive the non-salary part of the total compensation. We looked at a group of companies with market capitalizations from HK$31b to HK$94b, and the median CEO total compensation was HK$4.8m.

It would therefore appear that Xinyi Solar Holdings Limited pays Yau Ching Lee 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.

You can see a visual representation of the CEO compensation at Xinyi Solar Holdings, below.

SEHK:968 CEO Compensation, December 13th 2019
SEHK:968 CEO Compensation, December 13th 2019

Is Xinyi Solar Holdings Limited Growing?

On average over the last three years, Xinyi Solar Holdings Limited has shrunk earnings per share by 6.1% each year (measured with a line of best fit). In the last year, its revenue is down 11%.

Few shareholders would be pleased to read that earnings per share are lower over three years. And the fact that revenue is down year on year arguably paints an ugly picture. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. You might want to check this free visual report on analyst forecasts for future earnings.

Has Xinyi Solar Holdings Limited Been A Good Investment?

I think that the total shareholder return of 146%, over three years, would leave most Xinyi Solar Holdings Limited shareholders smiling. This strong performance might mean some shareholders don’t mind if the CEO were to be paid more than is normal for a company of its size.

In Summary…

We compared total CEO remuneration at Xinyi Solar Holdings Limited with the amount paid at companies with a similar market capitalization. Our data suggests that it pays above the median CEO pay within that group.

Neither earnings per share nor revenue have been growing sufficiently to impress us, over the last three years. But clearly there are some positives, because investors have done well over the same time frame. So on this analysis we’d stop short of criticizing the level of CEO compensation. Shareholders may want to check for free if Xinyi Solar Holdings insiders are buying or selling shares.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.

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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