We Discuss Why Binhai Investment Company Limited's (HKG:2886) CEO Will Find It Hard To Get A Pay Rise From Shareholders This Year

Under the guidance of CEO Liang Gao, Binhai Investment Company Limited (HKG:2886) has performed reasonably well recently. As shareholders go into the upcoming AGM on 14 May 2021, CEO compensation will probably not be their focus, but rather the steps management will take to continue the growth momentum. We present our case of why we think CEO compensation looks fair.

Check out our latest analysis for Binhai Investment

Comparing Binhai Investment Company Limited's CEO Compensation With the industry

At the time of writing, our data shows that Binhai Investment Company Limited has a market capitalization of HK$2.0b, and reported total annual CEO compensation of HK$1.4m for the year to December 2020. That's just a smallish increase of 3.3% on last year. While we always look at total compensation first, our analysis shows that the salary component is less, at HK$664k.

For comparison, other companies in the same industry with market capitalizations ranging between HK$777m and HK$3.1b had a median total CEO compensation of HK$1.6m. This suggests that Binhai Investment remunerates its CEO largely in line with the industry average.

Component	2020	2019	Proportion (2020)
Salary	HK$664k	HK$650k	47%
Other	HK$742k	HK$711k	53%
Total Compensation	HK$1.4m	HK$1.4m	100%

Speaking on an industry level, nearly 49% of total compensation represents salary, while the remainder of 51% is other remuneration. Although there is a difference in how total compensation is set, Binhai Investment more or less reflects the market in terms of setting the salary. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

A Look at Binhai Investment Company Limited's Growth Numbers

Binhai Investment Company Limited's earnings per share (EPS) grew 15% per year over the last three years. In the last year, its revenue is up 2.7%.

This demonstrates that the company has been improving recently and is good news for the shareholders. It's also good to see modest revenue growth, suggesting the underlying business is healthy. 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?

Binhai Investment Company Limited has generated a total shareholder return of 3.7% over three years, so most shareholders wouldn't be too disappointed. Although, there's always room to improve. Accordingly, a proposal to increase CEO remuneration without seeing an improvement in shareholder returns might not be met favorably by most shareholders.

To Conclude...

Seeing that the company has put up a decent performance, only a few shareholders, if any at all, might have questions about the CEO pay in the upcoming AGM. However, we still think that any proposed increase in CEO compensation will be examined closely to make sure the compensation is appropriate and linked to performance.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. In our study, we found 4 warning signs for Binhai Investment you should be aware of, and 1 of them is potentially serious.

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.

If you're looking for stocks to buy, use the lowest-cost* platform that is rated #1 Overall by Barron’s, Interactive Brokers. Trade stocks, options, futures, forex, bonds and funds on 135 markets, all from a single integrated account. Promoted

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.
^*Interactive Brokers Rated Lowest Cost Broker by StockBrokers.com Annual Online Review 2020

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.