What We Learned About CPMC Holdings' (HKG:906) CEO Compensation

Ye Zhang became the CEO of CPMC Holdings Limited (HKG:906) in 2016, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.

Check out our latest analysis for CPMC Holdings

Comparing CPMC Holdings Limited's CEO Compensation With the industry

Our data indicates that CPMC Holdings Limited has a market capitalization of HK$3.7b, and total annual CEO compensation was reported as CN¥1.6m for the year to December 2019. We note that's an increase of 26% above last year. While we always look at total compensation first, our analysis shows that the salary component is less, at CN¥766k.

On comparing similar companies from the same industry with market caps ranging from HK$1.6b to HK$6.2b, we found that the median CEO total compensation was CN¥1.6m. From this we gather that Ye Zhang is paid around the median for CEOs in the industry. Moreover, Ye Zhang also holds HK$33m worth of CPMC Holdings stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Speaking on an industry level, nearly 78% of total compensation represents salary, while the remainder of 22% is other remuneration. CPMC Holdings sets aside a smaller share of compensation for salary, in comparison to the overall industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

A Look at CPMC Holdings Limited's Growth Numbers

Earnings per share at CPMC Holdings Limited are much the same as they were three years ago, albeit slightly lower. The trailing twelve months of revenue was pretty much the same as the prior period.

A lack of EPS improvement is not good to see. And the flat revenue is seriously uninspiring. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. 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 CPMC Holdings Limited Been A Good Investment?

Since shareholders would have lost about 35% over three years, some CPMC Holdings Limited investors would surely be feeling negative emotions. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

To Conclude...

As previously discussed, Ye is compensated close to the median for companies of its size, and which belong to the same industry. On the other hand, EPS growth and total shareholder return have been negative for the last three years. Considering overall performance, shareholders will likely hold off support for a raise until results improve.

CEO pay is simply one of the many factors that need to be considered while examining business performance. We identified 2 warning signs for CPMC Holdings (1 is concerning!) that you should be aware of before investing here.

Switching gears from CPMC Holdings, 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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