In 2016 Xiaohang Chen was appointed CEO of HongDa Financial Holding Limited (HKG:1822). This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. Next, we’ll consider growth that the business demonstrates. 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.
How Does Xiaohang Chen’s Compensation Compare With Similar Sized Companies?
According to our data, HongDa Financial Holding Limited has a market capitalization of HK$191m, and pays its CEO total annual compensation worth HK$2.0m. (This is based on the year to December 2018). We think total compensation is more important but we note that the CEO salary is lower, at HK$22k. We looked at a group of companies with market capitalizations under HK$1.6b, and the median CEO total compensation was HK$1.9m.
So Xiaohang Chen receives a similar amount to the median CEO pay, amongst the companies we looked at. Although this fact alone doesn’t tell us a great deal, it becomes more relevant when considered against the business performance.
You can see a visual representation of the CEO compensation at HongDa Financial Holding, below.
Is HongDa Financial Holding Limited Growing?
HongDa Financial Holding Limited has reduced its earnings per share by an average of 99% a year, over the last three years (measured with a line of best fit). It saw its revenue drop -63% over the last year.
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. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO.
Has HongDa Financial Holding Limited Been A Good Investment?
Since shareholders would have lost about 90% over three years, some HongDa Financial Holding Limited shareholders would surely be feeling negative emotions. It therefore might be upsetting for shareholders if the CEO were paid generously.
Xiaohang Chen is paid around the same as most CEOs of similar size companies.
The company isn’t growing EPS, and shareholder returns have been disappointing. Most would consider it prudent for the company to hold off any CEO pay rise until performance improves. Whatever your view on compensation, you might want to check if insiders are buying or selling HongDa Financial Holding shares (free trial).
Important note: HongDa Financial Holding 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.
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If you spot an error that warrants correction, please contact the editor at email@example.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.