Is AKM Industrial Company Limited (HKG:1639) Excessively Paying Its CEO?

Zhi Qiang Chai became the CEO of AKM Industrial Company Limited (HKG:1639) in 2004. 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. Third, we’ll reflect on the total return to shareholders over three years, as a second measure of business performance. This method should give us information to assess how appropriately the company pays the CEO.

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View our latest analysis for AKM Industrial

How Does Zhi Qiang Chai’s Compensation Compare With Similar Sized Companies?

According to our data, AKM Industrial Company Limited has a market capitalization of HK$1.9b, and pays its CEO total annual compensation worth HK$917k. (This number is for the twelve months until December 2017). While this analysis focuses on total compensation, it’s worth noting the salary is lower, valued at HK$691k. When we examined a selection of companies with market caps ranging from HK$785m to HK$3.1b, we found the median CEO total compensation was HK$1.7m.

This would give shareholders a good impression of the company, since most similar size companies have to pay more, leaving less for shareholders. However, before we heap on the praise, we should delve deeper to understand business performance.

You can see a visual representation of the CEO compensation at AKM Industrial, below.

SEHK:1639 CEO Compensation, May 22nd 2019
SEHK:1639 CEO Compensation, May 22nd 2019

Is AKM Industrial Company Limited Growing?

On average over the last three years, AKM Industrial Company Limited has grown earnings per share (EPS) by 65% each year (using a line of best fit). It achieved revenue growth of 9.4% over the last year.

This shows that the company has improved itself over the last few years. Good news for shareholders. It’s also good to see modest revenue growth, suggesting the underlying business is healthy. We don’t have analyst forecasts, but you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has AKM Industrial Company Limited Been A Good Investment?

Boasting a total shareholder return of 76% over three years, AKM Industrial Company 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…

AKM Industrial Company Limited is currently paying its CEO below what is normal for companies of its size. Considering the underlying business is growing earnings, this would suggest the pay is modest. The strong history of shareholder returns might even have some thinking that Zhi Qiang Chai deserves a raise!

Most shareholders like to see a modestly paid CEO combined with strong performance by the company. But it is even better if company insiders are also buying shares with their own money. Whatever your view on compensation, you might want to check if insiders are buying or selling AKM Industrial shares (free trial).

Important note: AKM Industrial may not be the best stock to buy. You might find something better in this list of interesting companies with high ROE and low debt.

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.