What Can We Conclude About Bank of Qingdao's (HKG:3866) CEO Pay?

Lin Wang is the CEO of Bank of Qingdao Co., Ltd. (HKG:3866), and in this article, we analyze the executive's compensation package with respect to the overall performance of the company. This analysis will also assess whether Bank of Qingdao pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

See our latest analysis for Bank of Qingdao

How Does Total Compensation For Lin Wang Compare With Other Companies In The Industry?

At the time of writing, our data shows that Bank of Qingdao Co., Ltd. has a market capitalization of HK$27b, and reported total annual CEO compensation of CN¥2.5m for the year to December 2019. We note that's an increase of 11% above last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at CN¥1.0m.

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 Lin Wang is paid more than the median for the industry. Moreover, Lin Wang also holds HK$2.2m worth of Bank of Qingdao stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

On an industry level, around 60% of total compensation represents salary and 40% is other remuneration. Bank of Qingdao pays a modest slice of remuneration through salary, as compared to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

Bank of Qingdao Co., Ltd.'s Growth

Bank of Qingdao Co., Ltd. has reduced its earnings per share by 5.1% a year over the last three years. Its revenue is up 8.9% over the last year.

Overall this is not a very positive result for shareholders. The fairly low revenue growth fails to impress given that the EPS is down. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. We don't have analyst forecasts, but you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.

Has Bank of Qingdao Co., Ltd. Been A Good Investment?

With a three year total loss of 21% for the shareholders, Bank of Qingdao Co., Ltd. would certainly have some dissatisfied shareholders. So shareholders would probably want the company to be lessto generous with CEO compensation.

In Summary...

As we touched on above, Bank of Qingdao 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. This doesn't look good against shareholder returns, which have been negative for the past three years. What's equally worrying is that the company isn't growing by our analysis. Considering such poor performance, we think shareholders might be concerned if the CEO's compensation were to grow.

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 2 warning signs (and 1 which shouldn't be ignored) in Bank of Qingdao 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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