How Is China Dongxiang (Group)'s (HKG:3818) CEO Paid Relative To Peers?

Zhiyong Zhang has been the CEO of China Dongxiang (Group) Co., Ltd. (HKG:3818) 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 China Dongxiang (Group) pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

View our latest analysis for China Dongxiang (Group)

Comparing China Dongxiang (Group) Co., Ltd.'s CEO Compensation With the industry

Our data indicates that China Dongxiang (Group) Co., Ltd. has a market capitalization of HK$4.6b, and total annual CEO compensation was reported as CN¥3.1m for the year to March 2020. We note that's a small decrease of 3.1% on last year. In particular, the salary of CN¥2.89m, makes up a huge portion of the total compensation being paid to the CEO.

In comparison with other companies in the industry with market capitalizations ranging from HK$1.6b to HK$6.2b, the reported median CEO total compensation was CN¥1.5m. Accordingly, our analysis reveals that China Dongxiang (Group) Co., Ltd. pays Zhiyong Zhang north of the industry median. Furthermore, Zhiyong Zhang directly owns HK$131m worth of shares in the company, implying that they are deeply invested in the company's success.

Talking in terms of the industry, salary represented approximately 93% of total compensation out of all the companies we analyzed, while other remuneration made up 7.4% of the pie. China Dongxiang (Group) is largely mirroring the industry average when it comes to the share a salary enjoys in overall compensation. 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 China Dongxiang (Group) Co., Ltd.'s Growth Numbers

China Dongxiang (Group) Co., Ltd.'s earnings per share (EPS) grew 12% per year over the last three years. Revenue was pretty flat on last year.

This demonstrates that the company has been improving recently and is good news for the shareholders. It's also good to see modest revenue growth, suggesting the underlying business is healthy. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has China Dongxiang (Group) Co., Ltd. Been A Good Investment?

With a three year total loss of 31% for the shareholders, China Dongxiang (Group) Co., Ltd. would certainly have some dissatisfied shareholders. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

As previously discussed, Zhiyong is compensated more than what is normal for CEOs of companies of similar size, and which belong 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 Zhiyong is earning a very handsome sum.

CEO pay is simply one of the many factors that need to be considered while examining business performance. In our study, we found 3 warning signs for China Dongxiang (Group) you should be aware of, and 1 of them is significant.

Important note: China Dongxiang (Group) is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE 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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