Is CITIC Resources Holdings Limited's (HKG:1205) CEO Pay Fair?
In 2015, Zhengang Suo was appointed CEO of CITIC Resources Holdings Limited (HKG:1205). This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. After that, we will consider the growth in the business. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This method should give us information to assess how appropriately the company pays the CEO.
See our latest analysis for CITIC Resources Holdings
How Does Zhengang Suo's Compensation Compare With Similar Sized Companies?
Our data indicates that CITIC Resources Holdings Limited is worth HK$2.0b, and total annual CEO compensation was reported as HK$12m for the year to December 2019. That's below the compensation, last year. We think total compensation is more important but we note that the CEO salary is lower, at HK$4.6m. Importantly, there may be performance hurdles relating to the non-salary component of the total compensation. We looked at a group of companies with market capitalizations from HK$776m to HK$3.1b, and the median CEO total compensation was HK$2.2m.
Next, let's break down remuneration compositions to understand how the industry and company compare with each other. On an industry level, roughly 83% of total compensation represents salary and 17% is other remuneration. Non-salary compensation represents a greater slice of the remuneration pie for CITIC Resources Holdings, in sharp contrast to the overall sector.
It would therefore appear that CITIC Resources Holdings Limited pays Zhengang Suo more than the median CEO remuneration at companies of a similar size, in the same market. However, this fact alone doesn't mean the remuneration is too high. 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 CITIC Resources Holdings has changed over time.
Is CITIC Resources Holdings Limited Growing?
CITIC Resources Holdings Limited has seen earnings per share (EPS) move positively by an average of 20% a year, over the last three years (using a line of best fit). In the last year, its revenue is down 23%.
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 CITIC Resources Holdings Limited Been A Good Investment?
Since shareholders would have lost about 73% over three years, some CITIC Resources Holdings Limited shareholders would surely be feeling negative emotions. So shareholders would probably think the company shouldn't be too generous with CEO compensation.
In Summary...
We examined the amount CITIC Resources Holdings Limited pays its CEO, and compared it to the amount paid by similar sized companies. We found that it pays well over the median amount paid in the benchmark group.
However, the earnings per share growth over three years is certainly impressive. However, the returns to investors are far less impressive, over the same period. Considering positive per-share earnings movement, but keeping in mind the weak returns, we'd need more time to form a view on CEO compensation. CEO compensation is an important area to keep your eyes on, but we've also identified 3 warning signs for CITIC Resources Holdings (1 is concerning!) that you should be aware of before investing here.
Important note: CITIC Resources Holdings may not be the best stock to buy. 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. Thank you for reading.
