Should You Worry About China Oriental Group Company Limited’s (HKG:581) CEO Pay Cheque?

Jingyuan Han has been the CEO of China Oriental Group Company Limited (HKG:581) since 2003. First, this article will compare CEO compensation with compensation at similar sized companies. Then we’ll look at a snap shot of the business growth. 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.

See our latest analysis for China Oriental Group

How Does Jingyuan Han’s Compensation Compare With Similar Sized Companies?

According to our data, China Oriental Group Company Limited has a market capitalization of HK$10b, and paid its CEO total annual compensation worth CN¥24m over the year to December 2018. Notably, the salary of CN¥24m is the vast majority of the CEO compensation. We looked at a group of companies with market capitalizations from CN¥7.0b to CN¥22b, and the median CEO total compensation was CN¥4.0m.

Thus we can conclude that Jingyuan Han receives more in total compensation than the median of a group of companies in the same market, and of similar size to China Oriental Group Company Limited. However, this doesn’t necessarily mean the pay is too high. We can better assess whether the pay is overly generous by looking into the underlying business performance.

The graphic below shows how CEO compensation at China Oriental Group has changed from year to year.

SEHK:581 CEO Compensation, February 11th 2020
SEHK:581 CEO Compensation, February 11th 2020

Is China Oriental Group Company Limited Growing?

On average over the last three years, China Oriental Group Company Limited has grown earnings per share (EPS) by 51% each year (using a line of best fit). In the last year, its revenue is down 5.2%.

This shows that the company has improved itself over the last few years. Good news for shareholders. The lack of revenue growth isn’t ideal, but it is the bottom line that counts most in business. Shareholders might be interested in this free visualization of analyst forecasts.

Has China Oriental Group Company Limited Been A Good Investment?

Boasting a total shareholder return of 99% over three years, China Oriental Group Company Limited has done well by shareholders. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

In Summary…

We compared the total CEO remuneration paid by China Oriental Group Company Limited, and compared it to remuneration at a group of similar sized companies. Our data suggests that it pays above the median CEO pay within that group.

However we must not forget that the EPS growth has been very strong over three years. On top of that, in the same period, returns to shareholders have been great. Considering this fine result for shareholders, we daresay the CEO compensation might be apt. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling China Oriental Group (free visualization of insider trades).

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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