We Take A Look At Whether Beijing Chunlizhengda Medical Instruments Co., Ltd.'s (HKG:1858) CEO May Be Underpaid

The impressive results at Beijing Chunlizhengda Medical Instruments Co., Ltd. (HKG:1858) recently will be great news for shareholders. At the upcoming AGM on 22 June 2021, they would be interested to hear about the company strategy going forward and get a chance to cast their votes on resolutions such as executive remuneration and other company matters. Here we will show why we think CEO compensation is appropriate and discuss the case for a pay rise.

View our latest analysis for Beijing Chunlizhengda Medical Instruments

Comparing Beijing Chunlizhengda Medical Instruments Co., Ltd.'s CEO Compensation With the industry

According to our data, Beijing Chunlizhengda Medical Instruments Co., Ltd. has a market capitalization of HK$9.6b, and paid its CEO total annual compensation worth CN¥1.3m over the year to December 2020. That's mostly flat as compared to the prior year's compensation. While we always look at total compensation first, our analysis shows that the salary component is less, at CN¥600k.

For comparison, other companies in the same industry with market capitalizations ranging between HK$7.8b and HK$25b had a median total CEO compensation of CN¥4.0m. In other words, Beijing Chunlizhengda Medical Instruments pays its CEO lower than the industry median. Furthermore, Chunbao Shi directly owns HK$3.1b worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2020	2019	Proportion (2020)
Salary	CN¥600k	CN¥600k	45%
Other	CN¥740k	CN¥736k	55%
Total Compensation	CN¥1.3m	CN¥1.3m	100%

Talking in terms of the industry, salary represented approximately 60% of total compensation out of all the companies we analyzed, while other remuneration made up 40% of the pie. In Beijing Chunlizhengda Medical Instruments' case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

A Look at Beijing Chunlizhengda Medical Instruments Co., Ltd.'s Growth Numbers

Over the past three years, Beijing Chunlizhengda Medical Instruments Co., Ltd. has seen its earnings per share (EPS) grow by 61% per year. It achieved revenue growth of 9.6% 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. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Beijing Chunlizhengda Medical Instruments Co., Ltd. Been A Good Investment?

Most shareholders would probably be pleased with Beijing Chunlizhengda Medical Instruments Co., Ltd. for providing a total return of 719% over three years. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.

To Conclude...

Seeing that the company has put in a relatively good performance, the CEO remuneration policy may not be the focus at the AGM. However, investors will get the chance to engage on key strategic initiatives and future growth opportunities for the company and set their longer-term expectations.

CEO compensation can have a massive impact on performance, but it's just one element. We did our research and spotted 1 warning sign for Beijing Chunlizhengda Medical Instruments that investors should look into moving forward.

Important note: Beijing Chunlizhengda Medical Instruments 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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