Is Cogobuy Group’s (HKG:400) CEO Being Overpaid?

Jeffrey Kang became the CEO of Cogobuy Group (HKG:400) in 2014. This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. Then we’ll look at a snap shot of the business growth. And finally – as a second measure of performance – we will look at the returns shareholders have received over the last few years. This method should give us information to assess how appropriately the company pays the CEO.

Check out our latest analysis for Cogobuy Group

How Does Jeffrey Kang’s Compensation Compare With Similar Sized Companies?

At the time of writing, our data says that Cogobuy Group has a market cap of HK$1.8b, and reported total annual CEO compensation of CN¥1.0m for the year to December 2018. Notably, the salary of CN¥1.0m is the vast majority of the CEO compensation. We looked at a group of companies with market capitalizations from CN¥694m to CN¥2.8b, and the median CEO total compensation was CN¥2.0m.

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 Cogobuy Group, below.

SEHK:400 CEO Compensation, January 26th 2020
SEHK:400 CEO Compensation, January 26th 2020

Is Cogobuy Group Growing?

Cogobuy Group has reduced its earnings per share by an average of 34% a year, over the last three years (measured with a line of best fit). In the last year, its revenue is down 19%.

Unfortunately, earnings per share have trended lower over the last three years. This is compounded by the fact revenue is actually down on last year. These factors suggest that the business performance wouldn’t really justify a high pay packet for the CEO. We don’t have analyst forecasts, but shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.

Has Cogobuy Group Been A Good Investment?

With a three year total loss of 88%, Cogobuy Group would certainly have some dissatisfied shareholders. So shareholders would probably think the company shouldn’t be too generous with CEO compensation.

In Summary…

It appears that Cogobuy Group remunerates its CEO below most similar sized companies.

Jeffrey Kang is paid less than CEOs of similar size companies, but the company isn’t growing and total shareholder returns have been disappointing. While one could argue it is appropriate for the CEO to be paid less than other CEOs of similar sized companies, given company performance, we would not call the pay overly generous. So you may want to check if insiders are buying Cogobuy Group shares with their own money (free access).

Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies, that have HIGH return on equity and low debt.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned.

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