Does Zhengzhou Coal Mining Machinery Group's (HKG:564) CEO Salary Compare Well With The Performance Of The Company?

Hao Jia has been the CEO of Zhengzhou Coal Mining Machinery Group Company Limited (HKG:564) since 2018, and this article will examine the executive's compensation with respect to the overall performance of the company. 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 Zhengzhou Coal Mining Machinery Group

How Does Total Compensation For Hao Jia Compare With Other Companies In The Industry?

Our data indicates that Zhengzhou Coal Mining Machinery Group Company Limited has a market capitalization of HK$23b, and total annual CEO compensation was reported as CN¥4.3m for the year to December 2019. That is, the compensation was roughly the same as last year. We note that the salary portion, which stands at CN¥2.44m constitutes the majority of total compensation received by the CEO.

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¥1.6m. This suggests that Hao Jia is paid more than the median for the industry.

Speaking on an industry level, nearly 86% of total compensation represents salary, while the remainder of 14% is other remuneration. It's interesting to note that Zhengzhou Coal Mining Machinery Group allocates a smaller portion of compensation to salary in comparison to the broader industry. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

A Look at Zhengzhou Coal Mining Machinery Group Company Limited's Growth Numbers

Zhengzhou Coal Mining Machinery Group Company Limited has seen its earnings per share (EPS) increase by 66% a year over the past three years. It achieved revenue growth of 1.1% over the last year.

Shareholders would be glad to know that the company has improved itself over the last few years. It's nice to see revenue heading northwards, as this is consistent with healthy business conditions. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.

Has Zhengzhou Coal Mining Machinery Group Company Limited Been A Good Investment?

Most shareholders would probably be pleased with Zhengzhou Coal Mining Machinery Group Company Limited for providing a total return of 131% over three years. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

To Conclude...

As previously discussed, Hao is compensated more than what is normal for CEOs of companies of similar size, and which belong to the same industry. However, Zhengzhou Coal Mining Machinery Group has produced strong EPS growth and shareholder returns over the last three years. As a result of the excellent all-round performance of the company, we believe CEO compensation is fair. The pleasing shareholder returns are the cherry on top. We wouldn't be wrong in saying that shareholders feel that Hao's performance creates value for the company.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. We did our research and spotted 4 warning signs for Zhengzhou Coal Mining Machinery Group that investors should look into moving forward.

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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