Xueqing Shen became the CEO of Bank of Zhengzhou Co., Ltd. (HKG:6196) in 2012, and we think it’s a good time to look at the executive’s compensation against the backdrop of overall company performance. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Bank of Zhengzhou.
Comparing Bank of Zhengzhou Co., Ltd.’s CEO Compensation With the industry
Our data indicates that Bank of Zhengzhou Co., Ltd. has a market capitalization of HK$23b, and total annual CEO compensation was reported as CN¥1.8m for the year to December 2019. That’s a notable decrease of 11% on last year. While this analysis focuses on total compensation, it’s worth acknowledging that the salary portion is lower, valued at CN¥830k.
In comparison with other companies in the industry with market capitalizations ranging from HK$16b to HK$50b, the reported median CEO total compensation was CN¥1.3m. This suggests that Xueqing Shen is paid more than the median for the industry.
On an industry level, roughly 60% of total compensation represents salary and 40% is other remuneration. Bank of Zhengzhou sets aside a smaller share of compensation for salary, in comparison to the overall industry. If non-salary compensation dominates total pay, it’s an indicator that the executive’s salary is tied to company performance.
A Look at Bank of Zhengzhou Co., Ltd.’s Growth Numbers
Bank of Zhengzhou Co., Ltd. has reduced its earnings per share by 16% a year over the last three years. Its revenue is up 6.6% over the last year.
Few shareholders would be pleased to read that earnings have declined. The modest increase in revenue in the last year isn’t enough to make us overlook the disappointing change in earnings per share. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. While we don’t have analyst forecasts for the company, 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 47% over three years, some Bank of Zhengzhou Co., Ltd. investors would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.
As we touched on above, Bank of Zhengzhou Co., Ltd. is currently paying its CEO higher than the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. Disappointingly, share price gains over the last three years have failed to materialize. Add to that declining earnings growth, and you have the perfect recipe for shareholder irritation. Overall, with such poor performance, shareholder’s would probably have questions if the company decided to give the CEO a raise.
CEO compensation is an important area to keep your eyes on, but we’ve also need to pay attention to other attributes of the company. We did our research and identified 3 warning signs (and 2 which are a bit unpleasant) in Bank of Zhengzhou we think you should know about.
Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.
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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. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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