What We Learned About Hengan International Group's (HKG:1044) CEO Pay

Lin Chit Hui is the CEO of Hengan International Group Company Limited (HKG:1044), and in this article, we analyze the executive's compensation package 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 Hengan International Group

How Does Total Compensation For Lin Chit Hui Compare With Other Companies In The Industry?

Our data indicates that Hengan International Group Company Limited has a market capitalization of HK$64b, and total annual CEO compensation was reported as CN¥1.9m for the year to December 2019. Notably, that's an increase of 66% over the year before. We note that the salary portion, which stands at CN¥1.53m constitutes the majority of total compensation received by the CEO.

On comparing similar companies from the same industry with market caps ranging from HK$31b to HK$93b, we found that the median CEO total compensation was CN¥5.4m. This suggests that Lin Chit Hui is paid below the industry median. What's more, Lin Chit Hui holds HK$14b worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

On an industry level, roughly 79% of total compensation represents salary and 21% is other remuneration. There isn't a significant difference between Hengan International Group and the broader market, in terms of salary allocation in the overall compensation package. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

Hengan International Group Company Limited's Growth

Hengan International Group Company Limited has seen its earnings per share (EPS) increase by 7.1% a year over the past three years. Its revenue is up 7.0% over the last year.

We would argue that the improvement in revenue is good, but isn't particularly impressive, but we're happy with the modest EPS growth. It's clear the performance has been quite decent, but it it falls short of outstanding,based on this information. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.

Has Hengan International Group Company Limited Been A Good Investment?

With a three year total loss of 26% for the shareholders, Hengan International Group Company Limited would certainly have some dissatisfied shareholders. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

As we noted earlier, Hengan International Group pays its CEO lower than the norm for similar-sized companies belonging to the same industry. But the company isn't growing and total shareholder returns have been disappointing. We're not critical of the remuneration Lin Chit receives, but it would be good to see improved returns to shareholders before compensation grows too much.

While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. That's why we did some digging and identified 1 warning sign for Hengan International Group that investors should think about before committing capital to this stock.

Switching gears from Hengan International Group, 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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