How Much Does Chongqing Machinery & Electric's (HKG:2722) CEO Make?

This article will reflect on the compensation paid to Ping Chen who has served as CEO of Chongqing Machinery & Electric Co., Ltd. (HKG:2722) since 2016. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.

See our latest analysis for Chongqing Machinery & Electric

Comparing Chongqing Machinery & Electric Co., Ltd.'s CEO Compensation With the industry

At the time of writing, our data shows that Chongqing Machinery & Electric Co., Ltd. has a market capitalization of HK$1.7b, and reported total annual CEO compensation of CN¥1.0m for the year to December 2019. That's a notable increase of 23% on last year. We think total compensation is more important but our data shows that the CEO salary is lower, at CN¥443k.

For comparison, other companies in the same industry with market capitalizations ranging between HK$775m and HK$3.1b had a median total CEO compensation of CN¥2.3m. That is to say, Ping Chen is paid under the industry median.

Talking in terms of the industry, salary represented approximately 63% of total compensation out of all the companies we analyzed, while other remuneration made up 37% of the pie. Chongqing Machinery & Electric pays a modest slice of remuneration through salary, as compared to the broader industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

Chongqing Machinery & Electric Co., Ltd.'s Growth

Over the last three years, Chongqing Machinery & Electric Co., Ltd. has shrunk its earnings per share by 33% per year. It achieved revenue growth of 18% over the last year.

The reduction in EPS, over three years, is arguably concerning. But on the other hand, revenue growth is strong, suggesting a brighter future. These two metrics are moving in different directions, so while it's hard to be confident judging performance, we think the stock is worth watching. 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 Chongqing Machinery & Electric Co., Ltd. Been A Good Investment?

Given the total shareholder loss of 33% over three years, many shareholders in Chongqing Machinery & Electric Co., Ltd. are probably rather dissatisfied, to say the least. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

To Conclude...

As previously discussed, Ping is compensated less than what is normal for CEOs of companies of similar size, and which belong to the same industry. But shareholder returns and EPS growth over the past three years are negative, which is cause for concern. Conversely, revenues are increasing at a healthy pace, recently. Though we believe Ping is modestly compensated, shareholders might want to see positive shareholder returns before agreeing compensation should be raised.

CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. In our study, we found 5 warning signs for Chongqing Machinery & Electric you should be aware of, and 2 of them can't be ignored.

Switching gears from Chongqing Machinery & Electric, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.

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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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