Ngan Cheung is the CEO of China Dynamics (Holdings) Limited (HKG:476). This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. Next, we’ll consider growth that the business demonstrates. Third, we’ll reflect on the total return to shareholders over three years, as a second measure of business performance. The aim of all this is to consider the appropriateness of CEO pay levels.
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How Does Ngan Cheung’s Compensation Compare With Similar Sized Companies?
According to our data, China Dynamics (Holdings) Limited has a market capitalization of HK$909m, and pays its CEO total annual compensation worth HK$2.6m. (This number is for the twelve months until March 2018). It is worth noting that the CEO compensation consists almost entirely of the salary, worth HK$2.5m. We took a group of companies with market capitalizations below HK$1.6b, and calculated the median CEO total compensation to be HK$1.5m.
As you can see, Ngan Cheung is paid more than the median CEO pay at companies of a similar size, in the same market. However, this does not necessarily mean China Dynamics (Holdings) Limited is paying too much. A closer look at the performance of the underlying business will give us a better idea about whether the pay is particularly generous.
You can see, below, how CEO compensation at China Dynamics (Holdings) has changed over time.
Is China Dynamics (Holdings) Limited Growing?
Over the last three years China Dynamics (Holdings) Limited has shrunk its earnings per share by an average of 26% per year (measured with a line of best fit). Its revenue is down -64% over last year.
Few shareholders would be pleased to read that earnings per share are lower over three years. And the impression is worse when you consider revenue is down year-on-year. It’s hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Although we don’t have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.
Has China Dynamics (Holdings) Limited Been A Good Investment?
With a three year total loss of 60%, China Dynamics (Holdings) Limited would certainly have some dissatisfied shareholders. So shareholders would probably think the company shouldn’t be too generous with CEO compensation.
We compared the total CEO remuneration paid by China Dynamics (Holdings) Limited, and compared it to remuneration at a group of similar sized companies. We found that it pays well over the median amount paid in the benchmark group.Neither earnings per share nor revenue have been growing sufficiently fast to impress us, over the last three years.
Over the same period, investors would have come away with nothing in the way of share price gains. This analysis suggests to us that the CEO is paid too generously! CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling China Dynamics (Holdings) (free visualization of insider trades).
Important note: China Dynamics (Holdings) may not be the best stock to buy. You might find something better in this list of interesting companies with high ROE and low debt.
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If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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. Thank you for reading.