Lung Lam became the CEO of Yuzhou Properties Company Limited (HKG:1628) in 2012. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. Then we'll look at a snap shot of the business growth. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. The aim of all this is to consider the appropriateness of CEO pay levels.
Check out our latest analysis for Yuzhou Properties
How Does Lung Lam's Compensation Compare With Similar Sized Companies?
Our data indicates that Yuzhou Properties Company Limited is worth HK$18b, and total annual CEO compensation was reported as CN¥2.3m for the year to December 2018. We think total compensation is more important but we note that the CEO salary is lower, at CN¥1.7m. When we examined a selection of companies with market caps ranging from CN¥7.1b to CN¥23b, we found the median CEO total compensation was CN¥3.8m.
Now let's take a look at the pay mix on an industry and company level to gain a better understanding of where Yuzhou Properties stands. On an industry level, roughly 68% of total compensation represents salary and 32% is other remuneration. Yuzhou Properties is largely mirroring the industry average when it comes to the share a salary enjoys in overall compensation
At first glance this seems like a real positive for shareholders, since Lung Lam is paid less than the average total compensation paid by similar sized companies. However, before we heap on the praise, we should delve deeper to understand business performance. You can see a visual representation of the CEO compensation at Yuzhou Properties, below.
Is Yuzhou Properties Company Limited Growing?
On average over the last three years, Yuzhou Properties Company Limited has seen earnings per share (EPS) move in a favourable direction by 16% each year (using a line of best fit). Its revenue is down 4.4% over last year.
This demonstrates that the company has been improving recently. A good result. The lack of revenue growth isn't ideal, but it is the bottom line that counts most in business. It could be important to check this free visual depiction of what analysts expect for the future.
Has Yuzhou Properties Company Limited Been A Good Investment?
Yuzhou Properties Company Limited has served shareholders reasonably well, with a total return of 27% over three years. But they probably don't want to see the CEO paid more than is normal for companies around the same size.
In Summary...
Yuzhou Properties Company Limited is currently paying its CEO below what is normal for companies of its size.
Considering the underlying business is growing earnings, this would suggest the pay is modest. While some might be keen on seeing higher returns, our short analysis has not produced any evidence to suggest Lung Lam is overcompensated. Few would complain about reasonable CEO remuneration when the business is growing earnings per share. But for me, it's even better if insiders are also buying shares with their own cold, hard, cash. Taking a breather from CEO compensation, we've spotted 4 warning signs for Yuzhou Properties (of which 2 are a bit unpleasant!) you should know about in order to have a holistic understanding of the stock.
Important note: Yuzhou Properties may not be the best stock to buy. You might find something better in this list of interesting companies with high ROE and low debt.
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