What We Learned About BeijingWest Industries International's (HKG:2339) CEO Pay

This article will reflect on the compensation paid to Zhouping Chen who has served as CEO of BeijingWest Industries International Limited (HKG:2339) since 2016. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.

See our latest analysis for BeijingWest Industries International

How Does Total Compensation For Zhouping Chen Compare With Other Companies In The Industry?

Our data indicates that BeijingWest Industries International Limited has a market capitalization of HK$391m, and total annual CEO compensation was reported as HK$2.2m for the year to December 2019. This means that the compensation hasn't changed much from last year. Notably, the salary which is HK$2.14m, represents most of the total compensation being paid.

For comparison, other companies in the industry with market capitalizations below HK$1.6b, reported a median total CEO compensation of HK$1.1m. Accordingly, our analysis reveals that BeijingWest Industries International Limited pays Zhouping Chen north of the industry median.

On an industry level, around 68% of total compensation represents salary and 32% is other remuneration. BeijingWest Industries International pays a high salary, concentrating more on this aspect of compensation in comparison to non-salary pay. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

BeijingWest Industries International Limited's Growth

Over the last three years, BeijingWest Industries International Limited has shrunk its earnings per share by 1.3% per year. Its revenue is down 21% over the previous year.

The lack of EPS growth is certainly unimpressive. This is compounded by the fact revenue is actually down on last year. These factors suggest that the business performance wouldn't really justify a high pay packet 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 BeijingWest Industries International Limited Been A Good Investment?

Since shareholders would have lost about 46% over three years, some BeijingWest Industries International Limited investors would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

Zhouping receives almost all of their compensation through a salary. As we touched on above, BeijingWest Industries International Limited is currently paying its CEO higher than the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. This doesn't look good against shareholder returns, which have been negative for the past three years. Arguably worse, we've been waiting for positive EPS growth for the last three years. Overall, with such poor performance, shareholder's would probably have questions if the company decided to give the CEO a raise.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. We did our research and identified 3 warning signs (and 1 which makes us a bit uncomfortable) in BeijingWest Industries International we think you should know about.

Important note: BeijingWest Industries International is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.

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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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