Is Hutchison China MediTech Limited's (LON:HCM) CEO Salary Justified?

Christian Hogg has been the CEO of Hutchison China MediTech Limited (LON:HCM) since 2006. 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. And finally - as a second measure of performance - we will look at the returns shareholders have received over the last few years. This method should give us information to assess how appropriately the company pays the CEO.

View our latest analysis for Hutchison China MediTech

Want to help shape the future of investing tools? Participate in a short research study and receive a subscription valued at $60.

How Does Christian Hogg's Compensation Compare With Similar Sized Companies?

According to our data, Hutchison China MediTech Limited has a market capitalization of UK£2.2b, and pays its CEO total annual compensation worth US$1.2m. (This figure is for the year to 2017). While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at US$432k. We looked at a group of companies with market capitalizations from US$2.0b to US$6.4b, and the median CEO compensation was US$2.6m.

A first glance this seems like a real positive for shareholders, since Christian Hogg is paid less than the average compensation paid by similar sized companies. While this is a good thing, you'll need to understand the business better before you can form an opinion.

You can see a visual representation of the CEO compensation at Hutchison China MediTech, below.

Is Hutchison China MediTech Limited Growing?

Hutchison China MediTech Limited has increased its earnings per share (EPS) by an average of 30% a year, over the last three years (using a line of best fit). Its revenue is down -9.0% over last year.

This shows that the company has improved itself over the last few years. Good news for shareholders. While it would be good to see revenue growth, profits matter more in the end.

You might want to check this free visual report on analyst forecasts for future earnings.

Has Hutchison China MediTech Limited Been A Good Investment?

Boasting a total shareholder return of 45% over three years, Hutchison China MediTech 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...

It looks like Hutchison China MediTech Limited pays its CEO less than similar sized companies. Since the business is growing, many would argue this suggests the pay is modest. And given most shareholders are probably very happy with recent returns, you might even think that Christian Hogg deserves a raise!

It's not often we see shareholders do so well, and yet the CEO is paid modestly. The cherry on top would be if company insiders are buying shares with their own money. If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at Hutchison China MediTech.

Of course, the past can be informative so you might be interested in considering this analytical visualization showing the company history of earnings and revenue.

To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.

Simply Wall St analyst Simply Wall St and Simply Wall St have no position in any of the companies mentioned. This article is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.