A Quick Analysis On China Leon Inspection Holding's (HKG:1586) CEO Compensation

The CEO of China Leon Inspection Holding Limited (HKG:1586) is Xiangli Li, and this article examines the executive's compensation against the backdrop of overall company performance. This analysis will also assess whether China Leon Inspection Holding pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

See our latest analysis for China Leon Inspection Holding

Comparing China Leon Inspection Holding Limited's CEO Compensation With the industry

According to our data, China Leon Inspection Holding Limited has a market capitalization of HK$408m, and paid its CEO total annual compensation worth CN¥1.7m over the year to December 2019. We note that's a decrease of 15% compared to last year. Notably, the salary which is CN¥1.19m, represents most of the total compensation being paid.

For comparison, other companies in the industry with market capitalizations below HK$1.6b, reported a median total CEO compensation of CN¥1.7m. From this we gather that Xiangli Li is paid around the median for CEOs in the industry. Furthermore, Xiangli Li directly owns HK$144m worth of shares in the company, implying that they are deeply invested in the company's success.

Speaking on an industry level, nearly 63% of total compensation represents salary, while the remainder of 37% is other remuneration. According to our research, China Leon Inspection Holding has allocated a higher percentage of pay to salary in comparison to the wider industry. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

China Leon Inspection Holding Limited's Growth

China Leon Inspection Holding Limited has reduced its earnings per share by 12% a year over the last three years. It achieved revenue growth of 53% over the last year.

The reduction in EPS, over three years, is arguably concerning. On the other hand, the strong revenue growth suggests the business is growing. It's hard to reach a conclusion about business performance right now. This may be one to watch. While we don't have analyst forecasts for the company, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.

Has China Leon Inspection Holding Limited Been A Good Investment?

With a three year total loss of 33% for the shareholders, China Leon Inspection Holding Limited would certainly have some dissatisfied shareholders. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

In Summary...

As we touched on above, China Leon Inspection Holding Limited is currently paying a compensation that's close to the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. Still, the company is logging healthy revenue growth over the last year. Contrarily, shareholder returns are in the red over the same stretch. EPS growth is bleak as well, adding fuel to the fire. It's tough for us to say Xiangli is overpaid but a mixed bag in terms of performance will surely irk shareholders and reduce chances of a raise.

CEO pay is simply one of the many factors that need to be considered while examining business performance. That's why we did our research, and identified 3 warning signs for China Leon Inspection Holding (of which 1 can't be ignored!) that you should know about in order to have a holistic understanding of the stock.

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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