Does Harbin Bank Co., Ltd.'s (HKG:6138) CEO Salary Reflect Performance?
Tianjun Lyu has been the CEO of Harbin Bank Co., Ltd. (HKG:6138) since 2017. This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. Next, we'll consider growth that the business demonstrates. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. The aim of all this is to consider the appropriateness of CEO pay levels.
Check out our latest analysis for Harbin Bank
How Does Tianjun Lyu's Compensation Compare With Similar Sized Companies?
Our data indicates that Harbin Bank Co., Ltd. is worth HK$13b, and total annual CEO compensation was reported as CN¥2.9m for the year to December 2018. While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at CN¥531k. We note that more than half of the total compensation is not the salary; and performance requirements may apply to this non-salary portion. We looked at a group of companies with market capitalizations from CN¥7.1b to CN¥23b, and the median CEO total compensation was CN¥3.3m.
Pay mix tells us a lot about how a company functions versus the wider industry, and it's no different in the case of Harbin Bank. Speaking on an industry level, we can see that nearly 62% of total compensation represents salary, while the remainder of 38% is other remuneration. It's interesting to note that Harbin Bank allocates a smaller portion of compensation to salary in comparison to the broader industry.
So Tianjun Lyu is paid around the average of the companies we looked at. Although this fact alone doesn't tell us a great deal, it becomes more relevant when considered against the business performance. You can see a visual representation of the CEO compensation at Harbin Bank, below.
Is Harbin Bank Co., Ltd. Growing?
Over the last three years Harbin Bank Co., Ltd. has shrunk its earnings per share by an average of 4.6% per year (measured with a line of best fit). It saw its revenue drop 16% over the last year.
Unfortunately, earnings per share have trended lower over the last three years. And the impression is worse when you consider revenue is down year-on-year. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Although we don't have analyst forecasts shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.
Has Harbin Bank Co., Ltd. Been A Good Investment?
With a three year total loss of 49%, Harbin Bank Co., Ltd. would certainly have some dissatisfied shareholders. This suggests it would be unwise for the company to pay the CEO too generously.
In Summary...
Remuneration for Tianjun Lyu is close enough to the median pay for a CEO of a similar sized company .
Returns have been disappointing and the company is not growing its earnings per share. Most would consider it prudent for the company to hold off any CEO pay rise until performance improves. On another note, Harbin Bank has 2 warning signs (and 1 which shouldn't be ignored) we think you should know about.
Important note: Harbin Bank 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.
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.
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