Is YTO Express (International) Holdings Limited (HKG:6123) Overpaying Its CEO?

The CEO of YTO Express (International) Holdings Limited (HKG:6123) is Spencer Lam. First, this article will compare CEO compensation with compensation at similar sized companies. Next, we'll consider growth that the business demonstrates. And finally - as a second measure of performance - we will look at the returns shareholders have received over the last few years. This process should give us an idea about how appropriately the CEO is paid.

Check out our latest analysis for YTO Express (International) Holdings

How Does Spencer Lam's Compensation Compare With Similar Sized Companies?

According to our data, YTO Express (International) Holdings Limited has a market capitalization of HK$585m, and paid its CEO total annual compensation worth HK$2.3m over the year to December 2019. That's a notable increase of 678% on last year. We think total compensation is more important but we note that the CEO salary is lower, at HK$281k. We further remind readers that the CEO may face performance requirements to receive the non-salary part of the total compensation. We examined a group of similar sized companies, with market capitalizations of below HK$1.6b. The median CEO total compensation in that group is HK$1.7m.

Now let's take a look at the pay mix on an industry and company level to gain a better understanding of where YTO Express (International) Holdings stands. Talking in terms of the sector, salary represented approximately 58% of total compensation out of all the companies we analysed, while other remuneration made up 42% of the pie. YTO Express (International) Holdings sets aside a smaller share of compensation for salary, in comparison to the overall industry.

As you can see, Spencer Lam is paid more than the median CEO pay at companies of a similar size, in the same market. However, this does not necessarily mean YTO Express (International) Holdings Limited is paying too much. We can better assess whether the pay is overly generous by looking into the underlying business performance. You can see, below, how CEO compensation at YTO Express (International) Holdings has changed over time.

Is YTO Express (International) Holdings Limited Growing?

On average over the last three years, YTO Express (International) Holdings Limited has seen earnings per share (EPS) move in a favourable direction by 19% each year (using a line of best fit). In the last year, its revenue is down 13%.

This shows that the company has improved itself over the last few years. Good news for shareholders. While it would be good to see revenue growth, profits matter more in the end. Although we don't have analyst forecasts you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.

Has YTO Express (International) Holdings Limited Been A Good Investment?

Since shareholders would have lost about 58% over three years, some YTO Express (International) Holdings Limited shareholders would surely be feeling negative emotions. It therefore might be upsetting for shareholders if the CEO were paid generously.

In Summary...

We compared the total CEO remuneration paid by YTO Express (International) Holdings Limited, and compared it to remuneration at a group of similar sized companies. Our data suggests that it pays above the median CEO pay within that group.

However, the earnings per share growth over three years is certainly impressive. On the other hand returns to investors over the same period have probably disappointed many. So shareholders might not feel great about the fact that CEO pay increased on last year. One might thus conclude that it would be better if the company waited until growth is reflected in the share price, before increasing CEO compensation. On another note, we've spotted 4 warning signs for YTO Express (International) Holdings that investors should look into moving forward.

If you want to buy a stock that is better than YTO Express (International) Holdings, this free list of high return, low debt companies is a great place to look.

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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. Thank you for reading.