Tao Zou has been the CEO of Kingsoft Corporation Limited (HKG:3888) since 2016, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.
View our latest analysis for Kingsoft
How Does Total Compensation For Tao Zou Compare With Other Companies In The Industry?
Our data indicates that Kingsoft Corporation Limited has a market capitalization of HK$56b, and total annual CEO compensation was reported as CN¥1.9m for the year to December 2019. That is, the compensation was roughly the same as last year. We note that the salary portion, which stands at CN¥1.66m constitutes the majority of total compensation received by the CEO.
For comparison, other companies in the same industry with market capitalizations ranging between HK$31b and HK$93b had a median total CEO compensation of CN¥23m. Accordingly, Kingsoft pays its CEO under the industry median. Moreover, Tao Zou also holds HK$48m worth of Kingsoft stock directly under their own name, which reveals to us that they have a significant personal stake in the company.
| Component | 2019 | 2018 | Proportion (2019) |
| Salary | CN¥1.7m | CN¥1.6m | 90% |
| Other | CN¥190k | CN¥195k | 10% |
| Total Compensation | CN¥1.9m | CN¥1.8m | 100% |
On an industry level, roughly 82% of total compensation represents salary and 18% is other remuneration. Our data reveals that Kingsoft allocates salary more or less in line with the wider market. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.
Kingsoft Corporation Limited's Growth
Over the last three years, Kingsoft Corporation Limited has shrunk its earnings per share by 48% per year. Its revenue is up 99% over the last year.
The decrease in EPS could be a concern for some investors. But on the other hand, revenue growth is strong, suggesting a brighter future. These two metrics are moving in different directions, so while it's hard to be confident judging performance, we think the stock is worth watching. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..
Has Kingsoft Corporation Limited Been A Good Investment?
Most shareholders would probably be pleased with Kingsoft Corporation Limited for providing a total return of 83% over three years. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.
In Summary...
As we noted earlier, Kingsoft pays its CEO lower than the norm for similar-sized companies belonging to the same industry. While at the same time, shareholder returns have been rock solid in the past three years and revenues have been growing as well. On the flip side, EPS growth during the same period is negative. Negative EPS growth notwithstanding, we can conclude that on this analysis the CEO compensation seems pretty sound.
While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. We did our research and spotted 1 warning sign for Kingsoft that investors should look into moving forward.
Important note: Kingsoft 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.
If you decide to trade Kingsoft, use the lowest-cost* platform that is rated #1 Overall by Barron’s, Interactive Brokers. Trade stocks, options, futures, forex, bonds and funds on 135 markets, all from a single integrated account. Promoted
If you're looking to trade Kingsoft, open an account with the lowest-cost platform trusted by professionals, Interactive Brokers.
With clients in over 200 countries and territories, and access to 160 markets, IBKR lets you trade stocks, options, futures, forex, bonds and funds from a single integrated account.
Enjoy no hidden fees, no account minimums, and FX conversion rates as low as 0.03%, far better than what most brokers offer.
Sponsored ContentValuation is complex, but we're here to simplify it.
Discover if Kingsoft might be undervalued or overvalued with our detailed analysis, featuring fair value estimates, potential risks, dividends, insider trades, and its financial condition.
Access Free AnalysisThis 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.
*Interactive Brokers Rated Lowest Cost Broker by StockBrokers.com Annual Online Review 2020
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com.
About SEHK:3888
Kingsoft
Engages in the entertainment and office software and services businesses in Mainland China, Hong Kong, and internationally.
Flawless balance sheet with solid track record.
