Is CLP Holdings Limited (HKG:2) Overpaying Its CEO?

Want to participate in a short research study? Help shape the future of investing tools and receive a $20 prize!

Richard Lancaster became the CEO of CLP Holdings Limited (HKG:2) in 2013. This analysis aims first to contrast CEO compensation with other large companies. Then we'll look at a snap shot of the business growth. And finally - as a second measure of performance - we will look at the returns shareholders have received over the last few years. This method should give us information to assess how appropriately the company pays the CEO.

See our latest analysis for CLP Holdings

How Does Richard Lancaster's Compensation Compare With Similar Sized Companies?

Our data indicates that CLP Holdings Limited is worth HK$239b, and total annual CEO compensation is HK$21m. (This number is for the twelve months until 2016). While we always look at total compensation first, we note that the salary component is less, at HK$8.8m. We took a group of companies with market capitalizations over HK$63b, and calculated the median CEO compensation to be HK$5.3m. There aren't very many mega-cap companies, so we had to take a wide range to get a meaningful comparison figure.

As you can see, Richard Lancaster is paid more than the median CEO pay at large companies, in the same market. However, this does not necessarily mean CLP Holdings Limited is paying too much. We can get a better idea of how generous the pay is by looking at the performance of the underlying business.

You can see, below, how CEO compensation at CLP Holdings has changed over time.

Is CLP Holdings Limited Growing?

Over the last three years CLP Holdings Limited has grown its earnings per share (EPS) by an average of 3.4% per year (using a line of best fit). In the last year, its revenue is up 13%.

This revenue growth could really point to a brighter future. And the modest growth in earnings per share isn't bad, either. So while performance isn't amazing, we think it really does seem quite respectable. You might want to check this free visual report on analyst forecasts for future earnings.

Has CLP Holdings Limited Been A Good Investment?

Most shareholders would probably be pleased with CLP Holdings Limited for providing a total return of 56% over three years. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

In Summary...

We compared total CEO remuneration at CLP Holdings Limited with the amount paid at other large companies. We found that it pays well over the median amount paid in the benchmark group.

While we generally prefer to see stronger EPS growth, there's no arguing with the strong returns to shareholders, over the last three years. So, considering these tasty returns, the CEO compensation may be quite appropriate. Shareholders may want to check for free if CLP Holdings insiders are buying or selling shares.

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

Promoted
When trading CLP Holdings or any other investment, use the platform considered by many to be the Professional's Gateway to the Worlds Market, Interactive Brokers. You get the lowest-cost* trading on stocks, options, futures, forex, bonds and funds worldwide from a single integrated account.