What Did Cosmos Machinery Enterprises' (HKG:118) CEO Take Home Last Year?

Freeman Tang became the CEO of Cosmos Machinery Enterprises Limited (HKG:118) in 2013, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Cosmos Machinery Enterprises.

See our latest analysis for Cosmos Machinery Enterprises

How Does Total Compensation For Freeman Tang Compare With Other Companies In The Industry?

At the time of writing, our data shows that Cosmos Machinery Enterprises Limited has a market capitalization of HK$323m, and reported total annual CEO compensation of HK$2.1m for the year to December 2019. That's a notable decrease of 53% on last year. We note that the salary portion, which stands at HK$2.08m constitutes the majority of total compensation received by the CEO.

In comparison with other companies in the industry with market capitalizations under HK$1.6b, the reported median total CEO compensation was HK$1.3m. Accordingly, our analysis reveals that Cosmos Machinery Enterprises Limited pays Freeman Tang north of the industry median.

On an industry level, around 86% of total compensation represents salary and 14% is other remuneration. Investors will find it interesting that Cosmos Machinery Enterprises pays the bulk of its rewards through a traditional salary, instead of non-salary benefits. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.

A Look at Cosmos Machinery Enterprises Limited's Growth Numbers

Over the past three years, Cosmos Machinery Enterprises Limited has seen its earnings per share (EPS) grow by 61% per year. Its revenue is down 11% over the previous year.

Shareholders would be glad to know that the company has improved itself over the last few years. The lack of revenue growth isn't ideal, but it is the bottom line that counts most in business. 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 Cosmos Machinery Enterprises Limited Been A Good Investment?

With a three year total loss of 23% for the shareholders, Cosmos Machinery Enterprises Limited would certainly have some dissatisfied shareholders. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

Cosmos Machinery Enterprises pays its CEO a majority of compensation through a salary. As we noted earlier, Cosmos Machinery Enterprises pays its CEO higher than the norm for similar-sized companies belonging to the same industry. But the company has impressed with its EPS growth, but it's disappointing to see negative shareholder returns over the same period. Although we'd stop short of calling it inappropriate, we think Freeman is earning a very handsome sum.

While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. We did our research and spotted 1 warning sign for Cosmos Machinery Enterprises that investors should look into moving forward.

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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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