How Should Investors Feel About MOBI Development's (HKG:947) CEO Remuneration?

Xiang Hu is the CEO of MOBI Development Co., Ltd. (HKG:947), and in this article, we analyze the executive's compensation package with respect to the overall performance of the company. This analysis will also assess whether MOBI Development pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

Check out our latest analysis for MOBI Development

How Does Total Compensation For Xiang Hu Compare With Other Companies In The Industry?

Our data indicates that MOBI Development Co., Ltd. has a market capitalization of HK$467m, and total annual CEO compensation was reported as CN¥1.2m for the year to December 2019. That's just a smallish increase of 7.9% on last year. We note that the salary portion, which stands at CN¥692.0k constitutes the majority of total compensation received by the CEO.

For comparison, other companies in the industry with market capitalizations below HK$1.6b, reported a median total CEO compensation of CN¥1.5m. So it looks like MOBI Development compensates Xiang Hu in line with the median for the industry. What's more, Xiang Hu holds HK$15m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Speaking on an industry level, nearly 72% of total compensation represents salary, while the remainder of 28% is other remuneration. MOBI Development sets aside a smaller share of compensation for salary, in comparison to the overall industry. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.

MOBI Development Co., Ltd.'s Growth

MOBI Development Co., Ltd.'s earnings per share (EPS) grew 16% per year over the last three years. In the last year, its revenue is down 13%.

This demonstrates that the company has been improving recently and is good news for the shareholders. While it would be good to see revenue growth, profits matter more in the end. While we don't have analyst forecasts for the company, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.

Has MOBI Development Co., Ltd. Been A Good Investment?

With a three year total loss of 58% for the shareholders, MOBI Development Co., Ltd. would certainly have some dissatisfied shareholders. So shareholders would probably want the company to be lessto generous with CEO compensation.

To Conclude...

As we touched on above, MOBI Development Co., Ltd. is currently paying a compensation that's close to the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. At the same time, the company has logged negative shareholder returns over the last three years. But on the bright side, EPS growth is positive over the same period. Overall, we wouldn't say Xiang is paid an unjustified compensation, but shareholders might not favor a raise before shareholder returns show a positive trend.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. That's why we did our research, and identified 4 warning signs for MOBI Development (of which 1 makes us a bit uncomfortable!) that you should know about in order to have a holistic understanding of the stock.

Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies that have HIGH return on equity and low debt.

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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. 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.
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