Our Take On Tian An China Investments' (HKG:28) CEO Salary

Patrick Lee became the CEO of Tian An China Investments Company Limited (HKG:28) in 2007, 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 look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Tian An China Investments.

Check out our latest analysis for Tian An China Investments

Comparing Tian An China Investments Company Limited's CEO Compensation With the industry

According to our data, Tian An China Investments Company Limited has a market capitalization of HK$7.0b, and paid its CEO total annual compensation worth HK$7.1m over the year to December 2019. 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$3.4m.

On examining similar-sized companies in the industry with market capitalizations between HK$3.1b and HK$12b, we discovered that the median CEO total compensation of that group was HK$5.3m. Hence, we can conclude that Patrick Lee is remunerated higher than the industry median.

Speaking on an industry level, nearly 70% of total compensation represents salary, while the remainder of 30% is other remuneration. In Tian An China Investments' case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

Tian An China Investments Company Limited's Growth

Tian An China Investments Company Limited has reduced its earnings per share by 53% a year over the last three years. It achieved revenue growth of 5.5% over the last year.

Overall this is not a very positive result for shareholders. And the modest revenue growth over 12 months isn't much comfort against the reduced EPS. 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 Tian An China Investments Company Limited Been A Good Investment?

With a three year total loss of 1.2% for the shareholders, Tian An China Investments Company Limited would certainly have some dissatisfied shareholders. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

In Summary...

As we noted earlier, Tian An China Investments pays its CEO higher than the norm for similar-sized companies belonging to the same industry. Unfortunately, this doesn't look great when you see shareholder returns have been negative over the last three years. To make matters worse, EPS growth has also been negative during this period. Overall, with such poor performance, shareholder's would probably have questions if the company decided to give the CEO a raise.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. In our study, we found 4 warning signs for Tian An China Investments you should be aware of, and 1 of them can't be ignored.

Important note: Tian An China Investments is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.

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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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