A Quick Analysis On Binhai Investment's (HKG:2886) CEO Compensation

Liang Gao has been the CEO of Binhai Investment Company Limited (HKG:2886) since 2009, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also assess whether Binhai Investment pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

View our latest analysis for Binhai Investment

How Does Total Compensation For Liang Gao Compare With Other Companies In The Industry?

According to our data, Binhai Investment Company Limited has a market capitalization of HK$1.6b, and paid its CEO total annual compensation worth HK$1.4m over the year to December 2019. That's a slightly lower by 4.4% over the previous year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at HK$650k.

In comparison with other companies in the industry with market capitalizations ranging from HK$775m to HK$3.1b, the reported median CEO total compensation was HK$1.7m. This suggests that Binhai Investment remunerates its CEO largely in line with the industry average.

On an industry level, total compensation is equally proportioned between salary and other compensation, that is, they each represent approximately 50% of the total compensation. Binhai Investment is largely mirroring the industry average when it comes to the share a salary enjoys in overall compensation. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

Binhai Investment Company Limited's Growth

Over the last three years, Binhai Investment Company Limited has shrunk its earnings per share by 17% per year. It achieved revenue growth of 4.2% over the last year.

Few shareholders would be pleased to read that EPS have declined. The fairly low revenue growth fails to impress given that the EPS is down. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.

Has Binhai Investment Company Limited Been A Good Investment?

Since shareholders would have lost about 24% over three years, some Binhai Investment Company Limited investors would surely be feeling negative emotions. So shareholders would probably want the company to be lessto generous with CEO compensation.

In Summary...

As previously discussed, Liang is compensated close to the median for companies of its size, and which belong to the same industry. On the other hand, EPS growth and total shareholder return have been negative for the last three years. We'd stop short of saying compensation is inappropriate, but we would understand if shareholders had questions regarding a future raise.

CEO pay is simply one of the many factors that need to be considered while examining business performance. We identified 4 warning signs for Binhai Investment (1 makes us a bit uncomfortable!) that you should be aware of before investing here.

Important note: Binhai Investment is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE 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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