Zhi Chai has been the CEO of AKM Industrial Company Limited (HKG:1639) since 2004. 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. 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.
How Does Zhi Chai’s Compensation Compare With Similar Sized Companies?
According to our data, AKM Industrial Company Limited has a market capitalization of HK$1.6b, and pays its CEO total annual compensation worth HK$917k. That’s a notable increase of 15% on last year. When we examined a selection of companies with market caps ranging from HK$783m to HK$3.1b, we found the median CEO compensation was HK$2m.
This would give shareholders a good impression of the company, since most similar size companies have to pay more, leaving less for shareholders. Though positive, it’s important we delve into the performance of the actual business.
The graphic below shows how CEO compensation at AKM Industrial has changed from year to year.
Is AKM Industrial Company Limited Growing?
On average over the last three years, AKM Industrial Company Limited has grown earnings per share (EPS) by 73% each year. It achieved revenue growth of 12% over the last year.
This shows that the company has improved itself over the last few years. Good news for shareholders. IThis sort of respectable year-on-year revenue growth is often seen at a healthy, growing business. Although we don’t have analyst forecasts, shareholders might want to examine this free detailed historical graph of earnings, revenue and cash flow.
Has AKM Industrial Company Limited Been A Good Investment?
AKM Industrial Company Limited has generated a total shareholder return of 6.7% over three years, so most shareholders wouldn’t be too disappointed. But they would probably prefer not to see CEO compensation far in excess of the median.
It appears that AKM Industrial Company Limited remunerates its CEO below most similar sized companies. Considering the underlying business is growing earnings, this would suggest the pay is modest. While some might be keen on seeing higher returns, our short analysis has not produced any evidence to suggest Zhi Chai is overcompensated.
Few would complain about reasonable CEO remuneration when the business is growing earnings per share. But it would be nice if insiders were also buying shares. I like to research companies that do not pay too much to the CEO. For example you might check if insiders are buying shares.
If you would prefer check out another company — one with potentially superior financials — then do not miss this free list of interesting companies, that have HIGH return on equity and low debt.
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 firstname.lastname@example.org.