Is SOHO China Limited’s (HKG:410) CEO Being Overpaid?

Shynn Zhang became the CEO of SOHO China Limited (HKG:410) in 2007. First, this article will compare CEO compensation with compensation at similar sized companies. After that, we will consider the growth in the business. Third, we’ll reflect on the total return to shareholders over three years, as a second measure of business performance. The aim of all this is to consider the appropriateness of CEO pay levels.

Check out our latest analysis for SOHO China

How Does Shynn Zhang’s Compensation Compare With Similar Sized Companies?

At the time of writing our data says that SOHO China Limited has a market cap of HK$16b, and is paying total annual CEO compensation of CN¥2.2m. (This figure is for the year to 2017). While this analysis focuses on total compensation, it’s worth noting the salary is lower, valued at CN¥1.2m. As part of our analysis we looked at companies in the same jurisdiction, with market capitalizations of CN¥6.9b to CN¥22b. The median total CEO compensation was CN¥3.2m.

This would give shareholders a good impression of the company, since most similar size companies have to pay more, leaving less for shareholders. While this is a good thing, you’ll need to understand the business better before you can form an opinion.

You can see a visual representation of the CEO compensation at SOHO China, below.

SEHK:410 CEO Compensation November 27th 18
SEHK:410 CEO Compensation November 27th 18

Is SOHO China Limited Growing?

On average over the last three years, SOHO China Limited has grown earnings per share (EPS) by 50% each year. It saw its revenue drop -9.3% over the last year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. Revenue growth is a real positive for growth, but ultimately profits are more important.

Shareholders might be interested in this free visualization of analyst forecasts. .

Has SOHO China Limited Been A Good Investment?

Boasting a total shareholder return of 50% over three years, SOHO China Limited has done well by shareholders. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

In Summary…

It looks like SOHO China Limited pays its CEO less than similar sized companies. Since the business is growing, many would argue this suggests the pay is modest. The pleasing shareholder returns are the cherry on top; you might even consider that Shynn Zhang deserves a raise!

It is relatively rare to see a modestly paid CEO when performance is so impressive. But it is even better if company insiders are also buying shares with their own money. So you may want to check if insiders are buying SOHO China shares with their own money (free access).

Or you might prefer gaze upon this detailed graph of past earnings, revenue and cash flow .

To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.