What Can We Make Of Beijing Jingcheng Machinery Electric's (HKG:187) CEO Compensation?

Junjie Li has been the CEO of Beijing Jingcheng Machinery Electric Company Limited (HKG:187) since 2017, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also assess whether Beijing Jingcheng Machinery Electric pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

See our latest analysis for Beijing Jingcheng Machinery Electric

Comparing Beijing Jingcheng Machinery Electric Company Limited's CEO Compensation With the industry

At the time of writing, our data shows that Beijing Jingcheng Machinery Electric Company Limited has a market capitalization of HK$2.0b, and reported total annual CEO compensation of CN¥627k for the year to December 2019. Notably, that's an increase of 8.6% over the year before. While we always look at total compensation first, our analysis shows that the salary component is less, at CN¥222k.

In comparison with other companies in the industry with market capitalizations ranging from HK$775m to HK$3.1b, the reported median CEO total compensation was CN¥2.1m. Accordingly, Beijing Jingcheng Machinery Electric pays its CEO under the industry median.

On an industry level, around 86% of total compensation represents salary and 14% is other remuneration. Beijing Jingcheng Machinery Electric sets aside a smaller share of compensation for salary, in comparison to the overall industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

A Look at Beijing Jingcheng Machinery Electric Company Limited's Growth Numbers

Over the last three years, Beijing Jingcheng Machinery Electric Company Limited has shrunk its earnings per share by 52% per year. Its revenue is down 9.7% over the previous year.

The decline in EPS is a bit concerning. This is compounded by the fact revenue is actually down on last year. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. 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 Beijing Jingcheng Machinery Electric Company Limited Been A Good Investment?

Since shareholders would have lost about 38% over three years, some Beijing Jingcheng Machinery Electric Company Limited investors would surely be feeling negative emotions. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

In Summary...

As previously discussed, Junjie is compensated less than what is normal for CEOs of companies of similar size, and which belong to the same industry. Over the last three years, shareholder returns have been downright disappointing, and EPSgrowth has been equally disappointing. Although we wouldn’t say CEO compensation is high, it’s tough to foresee shareholders warming up to thoughts of a bump anytime soon.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. That's why we did some digging and identified 1 warning sign for Beijing Jingcheng Machinery Electric that you should be aware of before investing.

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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