Shareholders Will Most Likely Find China Aluminum Cans Holdings Limited's (HKG:6898) CEO Compensation Acceptable

The share price of China Aluminum Cans Holdings Limited (HKG:6898) has increased significantly over the past few years. However, the earnings growth has not kept up with the share price momentum, suggesting that some other factors may be driving the price direction. These concerns will be at the front of shareholders' minds as they go into the AGM coming up on 12 May 2021. It would also be an opportunity for them to influence management through exercising their voting power on company resolutions, including CEO and executive remuneration, which could impact on firm performance in the future. From the data that we gathered, we think that shareholders should hold off on a raise on CEO compensation until performance starts to show some improvement.

View our latest analysis for China Aluminum Cans Holdings

How Does Total Compensation For Wan Tsang Lin Compare With Other Companies In The Industry?

According to our data, China Aluminum Cans Holdings Limited has a market capitalization of HK$451m, and paid its CEO total annual compensation worth HK$1.8m over the year to December 2020. That is, the compensation was roughly the same as last year. We think total compensation is more important but our data shows that the CEO salary is lower, at HK$383k.

For comparison, other companies in the industry with market capitalizations below HK$1.6b, reported a median total CEO compensation of HK$2.2m. So it looks like China Aluminum Cans Holdings compensates Wan Tsang Lin in line with the median for the industry. Furthermore, Wan Tsang Lin directly owns HK$330m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2020	2019	Proportion (2020)
Salary	HK$383k	HK$424k	21%
Other	HK$1.4m	HK$1.4m	79%
Total Compensation	HK$1.8m	HK$1.9m	100%

On an industry level, around 78% of total compensation represents salary and 22% is other remuneration. China Aluminum Cans Holdings pays a modest slice of remuneration through salary, as compared to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

China Aluminum Cans Holdings Limited's Growth

Over the last three years, China Aluminum Cans Holdings Limited has shrunk its earnings per share by 37% per year. In the last year, its revenue is down 11%.

Few shareholders would be pleased to read that EPS have declined. And the impression is worse when you consider revenue is down year-on-year. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. 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 Aluminum Cans Holdings Limited Been A Good Investment?

We think that the total shareholder return of 62%, over three years, would leave most China Aluminum Cans Holdings Limited shareholders smiling. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.

To Conclude...

While the return to shareholders does look promising, it's hard to ignore the lack of earnings growth and this makes us question whether these strong returns will continue. Shareholders should make the most of the coming opportunity to question the board on key concerns they may have and revisit their investment thesis with regards to the company.

CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. We did our research and identified 2 warning signs (and 1 which is a bit unpleasant) in China Aluminum Cans Holdings we think you should know about.

Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies that have HIGH return on equity and low debt.

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