Is Huaxi Holdings Company Limited’s (HKG:1689) CEO Salary Justified?

In 2013 Andy Zheng was appointed CEO of Huaxi Holdings Company Limited (HKG:1689). First, this article will compare CEO compensation with compensation at similar sized companies. After that, we will consider the growth in the business. Third, we’ll reflect on the total return to shareholders over three years, as a second measure of business performance. The aim of all this is to consider the appropriateness of CEO pay levels.

See our latest analysis for Huaxi Holdings

How Does Andy Zheng’s Compensation Compare With Similar Sized Companies?

Our data indicates that Huaxi Holdings Company Limited is worth HK$1.4b, and total annual CEO compensation is HK$1.6m. (This figure is for the year to March 2019). We note that’s an increase of 158% above last year. While we always look at total compensation first, we note that the salary component is less, at HK$104k. We examined companies with market caps from HK$785m to HK$3.1b, and discovered that the median CEO total compensation of that group was HK$2.2m.

So Andy Zheng is paid around the average of the companies we looked at. This doesn’t tell us a whole lot on its own, but looking at the performance of the actual business will give us useful context.

You can see, below, how CEO compensation at Huaxi Holdings has changed over time.

SEHK:1689 CEO Compensation, August 16th 2019
SEHK:1689 CEO Compensation, August 16th 2019

Is Huaxi Holdings Company Limited Growing?

Earnings per share at Huaxi Holdings Company Limited are much the same as they were three years ago, albeit slightly lower, based on the trend. In the last year, its revenue is up 25%.

Investors should note that, over three years, earnings per share are down. But on the other hand, revenue growth is strong, suggesting a brighter future. These two metric are moving in different directions, so while it’s hard to be confident judging performance, we think the stock is worth watching.

Has Huaxi Holdings Company Limited Been A Good Investment?

Most shareholders would probably be pleased with Huaxi Holdings Company Limited for providing a total return of 45% over three years. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

In Summary…

Andy Zheng is paid around the same as most CEOs of similar size companies.

The company isn’t showing particularly great growth, but shareholder returns have been pleasing. So we can conclude that on this analysis the CEO compensation seems pretty sound. If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at Huaxi Holdings.

If you want to buy a stock that is better than Huaxi Holdings, this free list of high return, low debt companies is a great place to look.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.