How Much Is Hailan Holdings' (HKG:2278) CEO Getting Paid?

Li Zhou became the CEO of Hailan Holdings Limited (HKG:2278) in 2017, 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 assess whether Hailan Holdings pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

Check out our latest analysis for Hailan Holdings

Comparing Hailan Holdings Limited's CEO Compensation With the industry

Our data indicates that Hailan Holdings Limited has a market capitalization of HK$1.5b, and total annual CEO compensation was reported as CN¥1.3m for the year to December 2019. This means that the compensation hasn't changed much from last year. We note that the salary portion, which stands at CN¥1.24m constitutes the majority of total compensation received by the CEO.

On examining similar-sized companies in the industry with market capitalizations between HK$775m and HK$3.1b, we discovered that the median CEO total compensation of that group was CN¥2.7m. This suggests that Li Zhou is paid below the industry median.

Talking in terms of the industry, salary represented approximately 70% of total compensation out of all the companies we analyzed, while other remuneration made up 30% of the pie. Hailan Holdings has gone down a largely traditional route, paying Li Zhou a high salary, giving it preference over non-salary benefits. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

Hailan Holdings Limited's Growth

Over the last three years, Hailan Holdings Limited has shrunk its earnings per share by 40% per year. It achieved revenue growth of 36% over the last year.

The reduction in EPS, over three years, is arguably concerning. But in contrast the revenue growth is strong, suggesting future potential for EPS growth. In conclusion we can't form a strong opinion about business performance yet; but it's one worth watching. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Hailan Holdings Limited Been A Good Investment?

With a total shareholder return of 29% over three years, Hailan Holdings Limited shareholders would, in general, be reasonably content. But they probably don't want to see the CEO paid more than is normal for companies around the same size.

To Conclude...

Hailan Holdings pays its CEO a majority of compensation through a salary. As previously discussed, Li is compensated less than what is normal for CEOs of companies of similar size, and which belong to the same industry. And revenue growth for the company is showing some positive trends.And revenues are growing at a healthy clip.And revenues are increasing at a good pace over the past year. However, shareholder returns, in comparison, did not strike us as that impressive, whileEPS growth was negative — a worrying sign. All things considered, we don't think CEO compensation is too generous, but stockholders might not favor a bump before overall performance improves substantially.

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. In our study, we found 3 warning signs for Hailan Holdings you should be aware of, and 2 of them are concerning.

Switching gears from Hailan 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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