What Can We Learn About Harbin Bank's (HKG:6138) CEO Compensation?

This article will reflect on the compensation paid to Tianjun Lyu who has served as CEO of Harbin Bank Co., Ltd. (HKG:6138) since 2017. This analysis will also assess whether Harbin Bank pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

View our latest analysis for Harbin Bank

How Does Total Compensation For Tianjun Lyu Compare With Other Companies In The Industry?

Our data indicates that Harbin Bank Co., Ltd. has a market capitalization of HK$11b, and total annual CEO compensation was reported as CN¥2.6m for the year to December 2019. We note that's a decrease of 9.4% compared to last year. We think total compensation is more important but our data shows that the CEO salary is lower, at CN¥581k.

On examining similar-sized companies in the industry with market capitalizations between HK$7.8b and HK$25b, we discovered that the median CEO total compensation of that group was CN¥1.7m. Hence, we can conclude that Tianjun Lyu is remunerated higher than the industry median.

Talking in terms of the industry, salary represented approximately 54% of total compensation out of all the companies we analyzed, while other remuneration made up 46% of the pie. It's interesting to note that Harbin Bank allocates a smaller portion of compensation to salary in comparison to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

Harbin Bank Co., Ltd.'s Growth

Over the last three years, Harbin Bank Co., Ltd. has shrunk its earnings per share by 14% per year. It saw its revenue drop 16% over the last year.

Overall this is not a very positive result for shareholders. And the impression is worse when you consider revenue is down year-on-year. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Harbin Bank Co., Ltd. Been A Good Investment?

Given the total shareholder loss of 47% over three years, many shareholders in Harbin Bank Co., Ltd. are probably rather dissatisfied, to say the least. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

As previously discussed, Tianjun is compensated more than what is normal for CEOs of companies of similar size, and which belong to the same industry. This doesn't look good against shareholder returns, which have been negative for the past three years. Add to that declining EPS growth, and you have the perfect recipe for shareholder irritation. 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 identified 2 warning signs for Harbin Bank (1 doesn't sit too well with us!) that you should be aware of before investing here.

Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies that have HIGH return on equity 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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