A Quick Analysis On Wuling Motors Holdings' (HKG:305) CEO Compensation

Shing Lee is the CEO of Wuling Motors Holdings Limited (HKG:305), and in this article, we analyze the executive's compensation package with respect to the overall performance of the company. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Wuling Motors Holdings.

View our latest analysis for Wuling Motors Holdings

How Does Total Compensation For Shing Lee Compare With Other Companies In The Industry?

According to our data, Wuling Motors Holdings Limited has a market capitalization of HK$7.0b, and paid its CEO total annual compensation worth CN¥1.8m over the year to December 2019. This means that the compensation hasn't changed much from last year. We think total compensation is more important but our data shows that the CEO salary is lower, at CN¥375k.

For comparison, other companies in the same industry with market capitalizations ranging between HK$3.1b and HK$12b had a median total CEO compensation of CN¥1.8m. From this we gather that Shing Lee is paid around the median for CEOs in the industry. What's more, Shing Lee holds HK$826m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

On an industry level, roughly 69% of total compensation represents salary and 31% is other remuneration. It's interesting to note that Wuling Motors Holdings allocates a smaller portion of compensation to salary in comparison to the broader industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

Wuling Motors Holdings Limited's Growth

Over the last three years, Wuling Motors Holdings Limited has shrunk its earnings per share by 111% per year. Its revenue is down 7.7% over the previous year.

Overall this is not a very positive result for shareholders. 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 Wuling Motors Holdings Limited Been A Good Investment?

Most shareholders would probably be pleased with Wuling Motors Holdings Limited for providing a total return of 372% over three years. 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...

As previously discussed, Shing is compensated close to the median for companies of its size, and which belong to the same industry. This isn't great when you look at it against the backdrop of EPS growth, which has been negative for the past three years. On the flip side, shareholder returns have been strong over the same time, which is certainly a positive sign. We're not saying CEO compensation is too generous, but shareholders will probably want to see an increase in EPS before agreeing the business should pay any more.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. That's why we did our research, and identified 4 warning signs for Wuling Motors Holdings (of which 2 are a bit unpleasant!) that you should know about in order to have a holistic understanding of the stock.

Important note: Wuling Motors Holdings 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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