Why Essex Bio-Technology's (HKG:1061) CEO Pay Matters

The CEO of Essex Bio-Technology Limited (HKG:1061) is Haizhou Fang, and this article examines the executive's compensation against the backdrop of overall company performance. This analysis will also assess whether Essex Bio-Technology pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

Check out our latest analysis for Essex Bio-Technology

Comparing Essex Bio-Technology Limited's CEO Compensation With the industry

At the time of writing, our data shows that Essex Bio-Technology Limited has a market capitalization of HK$2.4b, and reported total annual CEO compensation of HK$1.8m for the year to December 2019. That's a slight decrease of 4.0% on the prior year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at HK$737k.

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 HK$4.0m. That is to say, Haizhou Fang is paid under the industry median. Furthermore, Haizhou Fang directly owns HK$21m worth of shares in the company, implying that they are deeply invested in the company's success.

Speaking on an industry level, nearly 49% of total compensation represents salary, while the remainder of 51% is other remuneration. Essex Bio-Technology sets aside a smaller share of compensation for salary, in comparison to the overall industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

A Look at Essex Bio-Technology Limited's Growth Numbers

Essex Bio-Technology Limited has seen its earnings per share (EPS) increase by 13% a year over the past three years. In the last year, its revenue is down 15%.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. The lack of revenue growth isn't ideal, but it is the bottom line that counts most in business. We don't have analyst forecasts, but you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.

Has Essex Bio-Technology Limited Been A Good Investment?

With a three year total loss of 14% for the shareholders, Essex Bio-Technology Limited would certainly have some dissatisfied shareholders. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

As we noted earlier, Essex Bio-Technology pays its CEO lower than the norm for similar-sized companies belonging to the same industry. However, the EPS growth over three years is certainly impressive. It's tough to criticize CEO compensation when the per-share EPS movement is positive. Shareholders, though, would ideally like to see shareholder returns head north before they agree to any raise.

While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. We've identified 1 warning sign for Essex Bio-Technology that investors should be aware of in a dynamic business environment.

Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.

If you’re looking to trade Essex Bio-Technology, open an account with the lowest-cost* platform trusted by professionals, Interactive Brokers. Their clients from over 200 countries and territories trade stocks, options, futures, forex, bonds and funds worldwide from a single integrated account. Promoted

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.
^*Interactive Brokers Rated Lowest Cost Broker by StockBrokers.com Annual Online Review 2020

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com.