Is GCL-Poly Energy Holdings Limited’s (HKG:3800) CEO Salary Justified?

Zhanjun Zhu became the CEO of GCL-Poly Energy Holdings Limited (HKG:3800) in 2016. This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. After that, we will consider the growth in the business. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This process should give us an idea about how appropriately the CEO is paid.

View our latest analysis for GCL-Poly Energy Holdings

How Does Zhanjun Zhu’s Compensation Compare With Similar Sized Companies?

At the time of writing our data says that GCL-Poly Energy Holdings Limited has a market cap of HK$12b, and is paying total annual CEO compensation of CN¥9.0m. (This figure is for the year to December 2017). While we always look at total compensation first, we note that the salary component is less, at CN¥4.6m. As part of our analysis we looked at companies in the same jurisdiction, with market capitalizations of CN¥6.7b to CN¥22b. The median total CEO compensation was CN¥2.8m.

As you can see, Zhanjun Zhu is paid more than the median CEO pay at companies of a similar size, in the same market. However, this does not necessarily mean GCL-Poly Energy Holdings Limited is paying too much. We can better assess whether the pay is overly generous by looking into the underlying business performance.

The graphic below shows how CEO compensation at GCL-Poly Energy Holdings has changed from year to year.

SEHK:3800 CEO Compensation, March 16th 2019
SEHK:3800 CEO Compensation, March 16th 2019

Is GCL-Poly Energy Holdings Limited Growing?

GCL-Poly Energy Holdings Limited has reduced its earnings per share by an average of 17% a year, over the last three years (measured with a line of best fit). Its revenue is up 12% over last year.

Unfortunately, earnings per share have trended lower over the last three years. There’s no doubt that the silver lining is that revenue is up. But it isn’t sufficiently fast growth to overlook the fact that earnings per share has gone backwards over three years. These factors suggest that the business performance wouldn’t really justify a high pay packet for the CEO. You might want to check this free visual report on analyst forecasts for future earnings.

Has GCL-Poly Energy Holdings Limited Been A Good Investment?

Since shareholders would have lost about 54% over three years, some GCL-Poly Energy Holdings Limited shareholders would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary…

We compared total CEO remuneration at GCL-Poly Energy Holdings Limited with the amount paid at companies with a similar market capitalization. As discussed above, we discovered that the company pays more than the median of that group.

We think many shareholders would be underwhelmed with the business growth over the last three years.

Arguably worse, investors are without a positive return for the last three years. In our opinion the CEO might be paid too generously! Whatever your view on compensation, you might want to check if insiders are buying or selling GCL-Poly Energy Holdings shares (free trial).

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

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. Thank you for reading.